Lloyd O Sullivan http://www.lloydosullivan.co.uk/blog Our Blog Tue, 14 Nov 2017 09:00:30 +0000 en-US hourly 1 Bank of Mum and Dad http://www.lloydosullivan.co.uk/blog/bank-of-mum-and-dad/ http://www.lloydosullivan.co.uk/blog/bank-of-mum-and-dad/#comments Tue, 14 Nov 2017 09:00:30 +0000 http://www.lloydosullivan.co.uk/blog/?p=808 The UK’s most lenient lender?

The Bank of Mum and Dad is potentially the UK’s most lenient lender, and its relaxed approach means it ends up writing off huge numbers of loans each year, according to new research[1].

Remarkably, every one of the more than 1,000 parents interviewed said they had already loaned money to their children or grandchildren to cover major financial commitments, or hoped to do so in the future. But there is a risk that their generosity will come at a cost to their own financial futures – one in five (19%) said they had taken money out of their pension fund or sacrificed saving into their pension to help their children.

Short of money for emergencies

Others have had to cut back themselves as a result, with one in five (19%) saying they’ve had to go without certain things, while one in ten admit they have ended up being short of money for emergencies since giving the loan to a family member.
However, despite the potential costs to their own finances, nearly six out of ten (59%) of those who have lent money to their offspring have subsequently decided to write off some or all of the debt – with a generous one in three (34%) having written off the whole lot.

Onerous terms and conditions

Part of the reason could be that more often than not, applying for a loan at the Bank of Mum and Dad doesn’t involve any onerous terms and conditions – 75% of parents who have loaned money did not impose any conditions or specific repayment terms on their loans, despite the fact that more than three quarters (77%) of them initially expected to be repaid in full.

Just one in seven (14%) lent the money with an agreement of fixed monthly repayments, and only 8% put a written repayment agreement in place. However, one in fourteen creditor parents (7%) take a tough line and have a written agreement in place specifying exactly what the loaned money should be spent on.

Lending money their children can’t repay

In another sign that the Bank of Mum and Dad is happy to write risky loans to their families, many parents admit to lending money their children can’t repay. Of those who have written off some or all of their loans, two in five (41%) did so because their child simply couldn’t afford to pay them back, while one in seven (15%) said their child never had any intention of repaying them at all.

Whether it’s helping with a deposit to buy or rent a house, or clearing student debt, the Bank of Mum and Dad plays a vital role in the finances of younger people.
However, it is important that parents remember to consider their own futures when deciding on making loans to their families – for example, money taken now from savings and investments intended to provide for retirement could make a real dent in your income when the time comes to give up work, especially if you eventually have to write off all or some of the loan.

Generous amount of time to pay off their loans

The research also revealed that those parents who do expect to be repaid are giving their children a generous amount of time to pay off their loans. Nearly one in three (31%) expect repayments to take up to three years, and one in six (16%) expect to wait between three and ten years before the money is back in their accounts.

If you are considering dipping into your pension savings or stopping saving altogether to give or loan money to your children or grandchildren, you should first obtain professional financial advice before making any decisions. Pension saving is for the long term and, for most people, is most effective when you save as much as possible for as long as possible during your working lives.

How can we help?

For more information, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk – we look forward to hearing from you.

Source data:

[1] Research conducted by Consumer Intelligence on behalf of Prudential between 20 and 21 July 2017 among 1,057 parents.

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‘Empty nesters’ plan to downsize http://www.lloydosullivan.co.uk/blog/empty-nesters-plan-to-downsize/ http://www.lloydosullivan.co.uk/blog/empty-nesters-plan-to-downsize/#comments Mon, 13 Nov 2017 09:00:50 +0000 http://www.lloydosullivan.co.uk/blog/?p=805 Convenience rather than cash is the biggest motivation

There are plenty of reasons why moving into a smaller home makes sense, and more than 3.9 million over-55 ‘empty-nesters’ approaching retirement are planning to downsize to a cheaper property later in life[1] – but it is convenience rather than the cash that is their biggest motivation.

The nationwide study found nearly half (47%) of over-55 homeowners are planning to sell and move to cheaper homes in later life. On average, they expect to raise around £112,000 in equity by downsizing with around one in ten (11%) expecting to make more than £200,000. In fact, more than one in seven (13%) said they could not afford to retire unless they downsized.

Not all about the money

However, it is not all about the money – the main reason for downsizing is the convenience of running a smaller home in retirement. Nearly three quarters (74%) rated convenience as their main reason for downsizing compared with just 28% who said they were doing so mainly to release cash for retirement. Meanwhile, just over one in three (34%) said having a smaller garden was a major motivation.
However, worries about a shortage of homes suitable for retirement, fees and high property prices are the major reasons deterring some older homeowners from downsizing, the study found.
Lack of suitable available housing

A lack of suitable available housing is the main reason over-55s believe downsizing is not more popular – nearly four in ten (38%) blame the lack of suitable houses, while 24% blamed the cost of moving in terms of stamp duty, solicitors and estate agents, and 17% say high house prices put people off.

Of those who expect to raise money from downsizing, 60% will use it to boost their retirement funds and improve their standard of living. Nearly half (47%) will use the cash for travelling more, while 13% want to release equity to help their children buy a house, and 14% will simply give the cash to their children.

Considering making major financial decisions?

The results highlight the fact that many people are worried that the costs involved in moving house may eat into the equity they’ll be able to take from their home. If you are considering making major financial decisions in the run-up to retirement, such as selling your home, you should obtain professional financial advice for guidance on your pension options. Please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk.

Source data:

Research conducted by Consumer Intelligence on behalf of Prudential between 22 to 23 August 2017 among 1,092 homeowners aged 50+

[1] Estimate based on English Housing Survey showing 7.725 million homeowners aged 55+ in England and Wales (www.gov.uk/government/statistics/english-housing-survey-
2015-to-2016-headline-report), National Records of Scotland figures showing 1.04 million households with 55+ heads of households (www.nrscotland.gov.uk/statistics-and-data/statistics/statistics-by-theme/housholds/household-projections/archive/1998-based-household-projections/tables#table4), and home ownership rate of 58% in Scotland (www.gov.scot/Topics/Statistics/Browse/Housing-Regeneration/TrendTenure)

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Buy-to-let http://www.lloydosullivan.co.uk/blog/buy-to-let/ http://www.lloydosullivan.co.uk/blog/buy-to-let/#comments Tue, 07 Nov 2017 09:00:03 +0000 http://www.lloydosullivan.co.uk/blog/?p=803 Boom to be sustained by pension freedoms

In the previous five years, buy-to-let has seen the impact of huge property price increases, legislative changes, new tax treatment and deep economic uncertainty across the country.

New research reveals that it’s the over-50s who will help keep the buy-to-let market buoyant, with one in ten people (13%) aged 50 or over[1] likely to invest in property after they retire. This could create 1.3 million landlords[2] who consider property a safe bet when the time comes to access their pension wealth.

Boosting income in retirement

Key reasons for considering buy-to-let include the prospect of capital growth, as well as providing a regular income (50%) or to boost income in retirement (44%). A third of the over-50s (36%) think property is a safer place for their money than investing in stocks and shares. A similar number of people (35%) also think it provides better returns than leaving the money in their pension or putting it in the bank.

Some over-50s (22%) have already experienced success at being a landlord, while 18% said they were interested in residential property and would enjoy the process of rental management.

Withdrawing significant cash sums

There are a number of things to consider before embarking on a career as a landlord. First and foremost, a pension is designed to provide an income in retirement, which is usually done either through drawdown or an annuity. People will need to think long and hard before withdrawing significant sums of cash from their pension, as any withdrawal over the first 25% is subject to Income Tax.

If your main priority is to generate an income, then the rental yield from the property may not provide the income you expect. Don’t forget you will also have to manage the property, or pay someone to do this on your behalf.

Diversified investment portfolio

With most people’s main asset being their home, the old adage of having all of your eggs in one basket has never been truer when it comes to pensions and property. A diversified investment portfolio is more likely to deliver the retirement outcome you planned.

Ultimately, the choice of whether or not to invest in a buy-to-let property or portfolio depends on your goals. It’s worth remembering that there is a consensus that the private rented sector will grow, in whatever form, very significantly. A recent survey from Knight Frank suggests that as many as one in four Britons will be renting by 2021. If you think strategically, buy-to-let could therefore still represent an appropriate investment opportunity.

Creating a durable wealth management strategy

If you are contemplating using some or all of your pension pot under the new pension freedoms rules to enter the buy-to-let sector, there may be significant tax implications if you take too much of your savings in one go. Obtaining professional financial advice is essential to avoiding any potential tax implications. Whether you’re planning for retirement or looking to grow your wealth, we’ll help you design a durable wealth management strategy – please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk to review your situation.

Source data:

[1] Research was conducted by Censuswide between 28/06/2017 and 29/06/2017. Online interviews were conducted among 1,005 people aged 50 and over, yet to retire, who have some form of private pension savings.

[2] Retirement Advantage calculation using ONS population data of over-50s.




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Savings black hole http://www.lloydosullivan.co.uk/blog/savings-black-hole/ http://www.lloydosullivan.co.uk/blog/savings-black-hole/#comments Mon, 06 Nov 2017 09:00:14 +0000 http://www.lloydosullivan.co.uk/blog/?p=801 Inflation set to erode Britain’s £60 billion cash savings

Millions of Britons could see their savings shrink, as they don’t know how to shield them from the threat of rising inflation. Currently, UK savers are hoarding over £60 billion[1] in cash for long-term savings and investments, which stands to be eroded by £1.5 billion this year as a result of higher inflation.

Inflation has seen this savings mountain eroded by £760 million so far this year. If inflation were to continue at the 2017 average (2.4%), another £760 million could be lost between now and the end of the year[2].

The result of inflation

According to BlackRock’s Investor Pulse survey, polling 4,000 people in the UK, savers typically have £8,700 in cash, of which a quarter (£2,270) is set aside for long-term savings and investments. Of this pot, they stand to lose £55 this year as a result of inflation[3].

Britons believe their cash savings stand to be worth even less, with three quarters of people predicting that inflation is set to rise further in the next 12 months. Inflation compounded over 20 years would see the £2,270 pot that Britons have set aside for long-term savings and investments depleted by over a third (£870) per person, amounting to over £20 billion for the nation[4].

Taking the leap from cash

There is still however an emotional barrier that stops us from taking the leap out of cash and into investing. If UK savers had invested their £2,270 pot of cash in the FTSE All Share over the last 20 years, it would be worth £8,350 today. Even if they were to have invested a quarter of their pot in the FTSE All Share, they would still be £1,525 better off[5].

While we all struggle to make plans 20 or 30 years ahead, resigning all our money to cash is not the answer. We are approaching a decade of record low interest rates, which have been giving us little to no return on our money. We have to decide whether we are prepared to watch our money erode away, or try and grow our savings through investing.

Most exposed to inflation

The Pinched are a particularly vulnerable group of 16.5 million people in the UK with savings who will be worst hit by the rising cost of living, as they have no intention of moving any or any more of their money into investments. The Pinched are least likely to feel in control of their financial futures, and only one in five feel knowledgeable about investing.

Their dependency on cash is largely driven by their need to have quick access to their money (34%). Three in ten believe that the amount of cash they have is too small an amount to be worth investing, while a further three in ten prefer to keep their money in cash to act as a safety net (28%).

Reluctance to move savings

There are a further eight million savers in the UK who are committed to staying in cash, saying that they have decided now is not the right time to be moving any more of their savings out of cash.

The Pausers’ reluctance to move any or any more of their savings out of cash has largely been driven by worries about market volatility (32%), and compounded by their nervousness about investing (25%). A guarantee that their capital is protected is the greatest incentive for them to take any further money out of cash and into an investment.

Higher risks for higher returns

The survey identifies three million savers in the UK who are most likely to beat the battle with inflation. This group has seriously considered moving some of their money out of cash and plan to do so in the next six months.

The Planners say that low savings rates and their fundamental belief that returns on investing are better over the long term are the main reasons why they are planning to move their savings out of cash. Of the three groups, the Planners are the most confident about their financial future (72%). Six in ten say they are knowledgeable about investing (58%) – the highest proportion of the three groups – and they are willing to take on higher risks for higher returns.

Making your money work harder

It’s important to set aside money for the future and protect it from inflation, whether it’s a rainy day fund to cover unexpected events or for longer-term goals. Whatever your financial goals may be, we can help make it easier for you to invest. To find out more about investing, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk.

Source data:

Investor Pulse Survey – BlackRock’s Global Investor Pulse Survey examines investing and attitudes and behaviours across the world. The 2017 survey included 28,000 respondents in 18 countries. The UK sample included 4,000 respondents between the ages of 25–74. Survey conducted in Q1 2017.

[1] Total median cash holding: survey population of 27.5m x £2,270. June 2017

[2] Average UK CPI inflation level for 2017 (2.43%) / 2.43% as a percentage of total median cash holding

[3] 2.43% as a percentage of individual median cash level

[4] www.buyupside.com/calculators/inflationjan08.htm – annual inflation rate of 2.43%, June 2017

[5] BlackRock: FTSE All Share 31/12/1996 – 30/12/2016




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Get ‘wrapped’ up http://www.lloydosullivan.co.uk/blog/get-wrapped-up/ http://www.lloydosullivan.co.uk/blog/get-wrapped-up/#comments Tue, 31 Oct 2017 09:00:21 +0000 http://www.lloydosullivan.co.uk/blog/?p=797 Autonomy to make your own investment decisions

Some people don’t want a pension company deciding how their pension savings are invested – they want to control where their money goes and how it grows. For people wanting to have autonomy to make their own investment decisions with their retirement savings, a Self-Invested Personal Pension (SIPP) may be an alternative solution.

A SIPP is a type of pension called a ‘defined contribution pension’ that allows you access to a wider choice of investments when it comes to saving for your retirement. It works in a similar way to a standard personal pension. The main difference is that with a SIPP ‘wrapper’, you have more flexibility with the investments you can choose.

More flexibility

The new pension freedoms introduced in 2015 mean from age 55 (increasing to 57 from 2028), you can take money out of your pension, normally 25% of which is tax-free and the rest as income, which will be subject to Income Tax.

You can choose what investments you want to put your savings into, and keep control of your savings. A SIPP can also be suitable if you want to consolidate all of your pensions into one pot before you retire, or if you want to keep your money invested after you retire so that you can draw down an income from it.

Investment options

If you are looking to put yourself in control of your financial future and give yourself the freedom to select the investments you think will deliver the best returns, these are some of your investment options:

• Stocks and shares
• Investment trusts listed on any stock exchange
• UK government bonds, plus bonds issued by foreign governments
• Open-ended investment companies which are recognised by the Financial Conduct Authority
• Gilts and bonds
• Exchange-traded funds traded on the London Stock Exchange or other European markets
• Bank deposit accounts including non-sterling accounts
• Commercial property
• Real estate investment trusts listed on any stock exchange
• Offshore funds

Tax facts

A SIPP benefits from the normal tax relief available to pensions. To add £100 to your pension, you pay in £80, and HM Revenue & Customs will add basic-rate tax relief at 20%. If you pay higher or top-rate tax, you can claim back the remaining tax relief through your tax return, meaning you can benefit from up to 45% tax relief. If you own commercial premises, SIPPs can offer valuable tax relief.

You can ‘sell’ your premises to the SIPP and free up funds to reinvest, and there are also Inheritance Tax benefits. They can also be set up under trust, meaning that it separates the legal ownership of your pension assets from your other non-pension assets. This means the fund on your death can normally be paid to a beneficiary without incurring Inheritance Tax. If you die before age 75, there is generally no Income Tax liability on any money your beneficiaries take out of the pension they inherit. However, if you die after age 75, your beneficiaries will pay Income Tax on any money they take out.

Experience counts

SIPPs may be appropriate if you have experience of investing and are completely comfortable making your own investment decisions. Some investments that you can place in a SIPP may be risky and not suitable for you.

If you don’t have experience, a stakeholder or personal pension may be more suitable for you. You may have a more limited choice of investments, but you could choose a fund that has a range of assets in it, rather than picking your own. SIPPs can also be more expensive, and their charges could eat into your returns if you only have a small amount invested. That’s why SIPPs are more suitable for people with larger amounts of savings.

Creating a vision of your ideal retirement

We can help you create a vision of your ideal retirement and calculate how much money you’ll need to fund it. It’s essential to obtain professional financial advice before you make any decisions. To discuss your retirement requirements, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk.





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Priceless education http://www.lloydosullivan.co.uk/blog/priceless-education/ http://www.lloydosullivan.co.uk/blog/priceless-education/#comments Mon, 30 Oct 2017 09:00:41 +0000 http://www.lloydosullivan.co.uk/blog/?p=795 Choosing an independent school is a serious investment

Parents or grandparents wishing to give their children or grandchildren the benefit of an independent education face startling costs. This is followed after school by the costs of a university education, which are also considerable. However, with careful planning, it may be possible to avoid a huge outstanding student loan or tax burden.

Choosing an independent school is a serious investment. Recent figures show that average boarding school fees stand at over £30,000 a year, with day-only attendance costing more than £17,000. These fees continue to rise, last year increasing by 3.5% compared to 2015[1].

Financial sacrifice for many parents

The overall cost for just one child can end up being about the same as buying an average home in the UK. That’s a massive financial sacrifice for many parents, leading them to wonder if it’s better to pay for their child’s education or save the money to help them onto the property ladder later in life. In any case, without planning ahead, the cost can be a huge money sink or lead to further borrowing.

There are a number of simple strategies to consider. The first option to consider is likely to be Individual Savings Accounts (or ‘ISAs’), along with directly held investments in the parents’ own name. This means that they will keep the right to access capital at any point with little or no tax liability through the ISA. In addition, the directly held portfolio can be used to take annual gains tax-free if within the Capital Gains Tax (CGT) allowance.

Deferred rather than extinguished

Once ISA and CGT allowances have been used, further capital could be held via an offshore bond. This allows a portfolio to be invested without taxation (deferred rather than extinguished) and also offers a facility for 5% per annum to be drawn down, again without tax liability at the time, which is particularly useful when it comes to paying annual school fees.

Offshore bonds offer UK resident individuals a number of attractive benefits. The allowance is tax deferred, rather than ‘tax-free’. On the final policy encashment, all previous withdrawals are accounted for when calculating the overall policy gain. If the 5% withdrawal allowance is not taken in any policy year, the unused allowance can be carried forward on a cumulative basis. If a withdrawal is taken which is over the 5% cumulative allowance, the excess is added to the policyholder’s other taxable income and taxed as savings income in the tax year in which the policy year end falls.

Reduce the tax liability on any excess

Top slicing relief may reduce the tax liability on any excess. However, if capital is required from the bond – which is in excess of the cumulative allowance – it is maybe more tax-efficient to surrender individual policies (segments) rather than take a partial surrender from across the entire bond.

In some situations, surrendering full segments could have immediate tax benefits. However, it is important to note that thereafter the allowance will be based on the initial premium paid in relation to the remaining segments.

Hefty price tag

When it comes to our children, a good education is priceless – but sending them to an independent school comes with a hefty price tag. If you are planning on giving your children or grandchildren a start in life by planning for their education, we can discuss with you the various options available. To find out more, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk.

Source data:

[1] Independent Schools Council, annual census 2017




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Growing care costs http://www.lloydosullivan.co.uk/blog/growing-care-costs/ http://www.lloydosullivan.co.uk/blog/growing-care-costs/#comments Mon, 16 Oct 2017 15:40:37 +0000 http://www.lloydosullivan.co.uk/blog/?p=775 growing
Ageing population faces significant funding crisis

As part of Budget 2017, Chancellor Philip Hammond announced an extra £2 billion of funding for social care and paved the way for major changes to how people pay for it. But people in the UK are still underestimating the cost of elderly care by £7 billion every year[1], according to new research from Scottish Widows’ independent think tank, the Centre for the Modern Family.

On average, UK adults estimate that residential care would cost £549 a week – when, in reality, it costs on average £866 for a place in a nursing home – leaving a shortfall of £317 every week[2].

Feeling stressed

More worryingly, the deficit could be significantly higher in reality, since one in four (25%) people admit they have no idea how they would cover these costs for themselves or a relative. Only 15% of people are saving money on a monthly basis to pay for their own care when the time comes, and almost half (49%) say they avoid thinking about the issue because it makes them feel stressed. With an ageing population and growing care costs, the nation could be facing a care funding crisis.

Instead, half (49%) of UK adults say they will have to rely on a relative to help them cover the costs. This could leave families in a difficult financial situation, particularly as more than four in ten (42%) people have £2,000 or less in life savings to fall back on, meaning they could only cover the cost of care for a maximum of two-and-a-half weeks.

Shared responsibilities

Half (50%) of UK adults believe the responsibility of helping parents to pay for care should be shared between siblings. However, almost half (48%) of those over the age of 55 still haven’t discussed who will take on this responsibility in their family. With more than nine out of ten (92%) people not saving anything to help their parents or other older relatives, this could lead to a significant shortfall in support, particularly as people estimate they could only afford to spend £69 a week on care for their parents.

A lack of understanding of the benefits system could also be problematic for many. Almost one in four people (24%) claim they would need, or expect, to rely entirely on state support, but two in five (42%) admit they don’t actually understand what benefits – both practical and financial – they would be entitled to.

Family sacrifices

An over-reliance on relatives to provide financial support already has a significant impact on families. Almost one quarter (23%) of those caring for a family member say it has put a strain on their finances. One in ten (12%) have been forced to make sacrifices to cover the cost of care for themselves or a relative, with a quarter (24%) of those people making major adjustments such as remortgaging their house. A similar proportion (22%) have been forced to make a moderate sacrifice such as taking on a second job to cover the costs.

Supporting relatives practically and financially also puts emotional strain on families. Of those providing care, four in five (80%) say it has had an effect on them, with more than a quarter (27%) admitting it has put a strain on their close relationships. Although women are more likely to say they have less time to themselves (48%) than men (34%) when caring for a relative, men (30%) are more likely to feel their family relationships have been impacted than women (23%).


The number of people in care in the UK is set to almost double by 2035. The research shows that an over-reliance on relatives and the state could put families in serious financial difficulty. It can seem difficult to know how to prepare for the future, but to avoid a financial care crisis, we all need to have an honest discussion on later life care as early as possible so no one is left footing a bill they can’t afford.
As for state provision, it’s clear that many people simply don’t understand the social care benefits and support system. Providing clarity and raising awareness of what is and isn’t available is critical to helping people prepare for the longer-term future.

It’s important to know the facts

You may be faced with a plethora of different options when looking into funding elderly care which can often be complicated to understand. So if you or a loved one needs to pay for care at home or in a care home, it’s important to know the facts. To discuss your particular requirements, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk.

Source data:

Report based on both quantitative and qualitative inputs, including a nationally representative Opinium survey of 2,000+ UK adults (aged 18 and over). Research carried out between 14 and 20 April 2017 and between 15 and 18 July 2017.

[1] Figure calculated based on underestimated price of residential nursing care per week (£317) (£866-£549) multiplied by current number of UK over-65s in care (421,100 according to the latest Laing & Buisson and detailed in Age UK’s ‘Later Life in the UK, August 2017’ report) including with nursing and multiplied by 52

[2] According to regional cost figures from Laing & Buisson Care of Older People, including England, Wales, Northern Ireland and Scotland

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Protect the things that mean the most to you http://www.lloydosullivan.co.uk/blog/protect-the-things-that-mean-the-most-to-you/ http://www.lloydosullivan.co.uk/blog/protect-the-things-that-mean-the-most-to-you/#comments Mon, 16 Oct 2017 15:40:21 +0000 http://www.lloydosullivan.co.uk/blog/?p=773 protect
Cohabiting families risking their family’s financial future

The lifestyle of our loved ones may be seriously compromised if we die. However, very worryingly, more than 2.4 million cohabiting families across the UK – the fastest-growing family type in the country – do not have life insurance, potentially leaving their loved ones open to financial problems once they pass away, according to new analysis[1].

Thousands of families at risk

The research found that 73% of cohabiting families – couples living as married – do not have a life insurance policy, compared to 56% of married couples. As cohabiting families do not yet enjoy the same legal rights as married couples, this is leaving thousands of families at risk should the worst happen and their partner dies.

Cohabiting families have been the fastest-growing household type over the last decade. The latest figures from the Office for National Statistics (ONS) show that the number has more than doubled from 1.5 million to 3.3 million since 1996. Furthermore, according to the latest ONS divorce and marriage statistics, the number of couples getting married has decreased by more than 6% since 2012, potentially due to the rise in couples choosing to cohabit.

Not prepared for the worst

At a regional level, cohabiting families in London, the West Midlands and the East of England are the least likely of all regions in the country to have life insurance. 87% of those living as married in London, 79% in the West Midlands and the same number in the East of England are not prepared for the worst simply by not having a life insurance policy in place.

On the other hand, cohabiting families in Wales, the North East and Scotland are the most likely of all regions to have life insurance. Despite this, 68% of those living as married in Wales, the same number in the North East and 52% in Scotland still do not have life insurance cover. Encouragingly, the region with the most cohabiting families – the South East – also has one of the highest proportion of those having a life insurance policy in place.

Choosing cohabitation over tying the knot

The findings show that marriage may be on the cards for some, but many people are now choosing cohabitation over tying the knot, and this may well be the case for the rest of our lives. Whether we marry or live together, the needs of loved ones left behind shouldn’t be overlooked. Life insurance can ensure the right money can go to the right person at the right time.

Further research found that women insure themselves for up to 30% less than men. The average level protection that men insure themselves for stands at more than £210,000, whereas women tend to insure themselves for just under £150,000.

Protection matters

Most of us insure our cars, homes and even our mobile phones – but what about helping to protect our loved ones? Help protect your family and give yourself peace of mind with the right level of life insurance. To review your protection needs, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk.

Source data:

[1] UK life insurance company, Zurich. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,039 adults. Fieldwork was undertaken between 20 and 21 July 2017. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+). ONS Data – each region multiplied by the percentage of people who do not have life insurance

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Don’t worry, be happy http://www.lloydosullivan.co.uk/blog/dont-worry-be-happy/ http://www.lloydosullivan.co.uk/blog/dont-worry-be-happy/#comments Mon, 16 Oct 2017 14:44:07 +0000 http://www.lloydosullivan.co.uk/blog/?p=780 dontworry
How to build a sustainable retirement income plan

It is impossible to consider retirement, and our experience of it, without also considering how we’ll pay for it. But almost 30% of people over the age of 55 are unsure if they will be able to retire on their current savings, according to new research[1].

Four out of five Britons are unhappy with the amount they are putting into their pension fund every month, while one in four people regret not starting to save for retirement earlier in life.

A Financial Conduct Authority (FCA) retirement income study has pointed to some of the risks faced by individuals with pensions who are approaching retirement.

One in four Britons regret not starting to save for retirement earlier in life

1. Take advice

As people approach retirement, it is crucial they take advice. The FCA has reported that non-advised people almost always remain with their existing pension provider instead of shopping around.

Obtaining professional financial advice will help secure the best value retirement income product to meet a retiree’s needs and help them understand a safe rate of withdrawal, balancing their income needs against life expectancy and the need to invest for income, which is very different to investing for growth.

2. Think twice before disinvesting your pension

Half of people are taking their pension savings out but not actually spending it. Instead, they are investing the proceeds into other products. This could be in cash, Individual Savings Accounts or buy-to-let properties. These actions will result in them giving up the advantages that pensions offer, such as future tax-free investment growth.

Cash is unlikely to produce good long-term returns, and illiquid assets like property present their own risks. Obtaining professional financial advice will enable people to identify the right approach to investing for their individual needs that match their financial goals in the longer term.

3. Do you need to touch your pension?

Pensions are not included in an individuals estate on death, which means Inheritance Tax of up to 40% will not apply. They used to be subject to a separate ‘pensions death tax’ but this has been removed as part of the pension freedom reforms. Now any unused drawdown funds can be passed on and will be tax-free or taxed at the beneficiaries’ marginal rate of income tax.

People need to consider whether it would be more tax-efficient to leave their pension invested and use other assets first. The FCA found that 94% of people who made a full withdrawal had other sources of retirement income available to them in addition to the state pension.

4. Can you afford to retire early?

The FCA report says 72% of pension pots are accessed before age 65, and individuals rarely consider ‘the future and any of the broader issues around how much they would need to live off’. Many people want to retire early, but it is important to ensure that won’t leave an income shortfall later on. A lot of people underestimate how long they will live for.

Income requirements are thought to follow a ‘U shape’ in retirement, with the first phase being the most exciting and therefore the immediate focus. This is where people start to enjoy retirement, and the risk is that they get carried away with their spending. Spending then tends to fall as people become a little less active and slow down, but costs may then go up in later life due to health issues, and care may be required.

People should have a plan in place to see them all the way through retirement, not just focusing on the now.

5. Don’t rule out an annuity purchase

Drawdown has surged in popularity versus annuities. However, before going into drawdown, people should consider which option best suits their needs. For instance, if they cannot afford for their pension to run out, considering an annuity may be more appropriate. Or they may decide to combine drawdown with an annuity to balance flexibility with security.

6. Consider your housing wealth

Many people have a good deal of their wealth tied up in their home. Relying on their home in retirement is difficult, and accessing it isn’t always simple. However, it is possible to access that wealth through equity release schemes or downsizing.

Stepping off the corporate treadmill

If you’re planning to step off the corporate treadmill in your 50s or early 60s and maintain your standard of living, talk to us so we can assess your existing plans and advise on any necessary changes required to achieve this goal. To discuss your retirement plans, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk – we look forward to hearing from you.

Source data:

[1] Pension Geeks



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Your wealth. Your legacy http://www.lloydosullivan.co.uk/blog/your-wealth-your-legacy/ http://www.lloydosullivan.co.uk/blog/your-wealth-your-legacy/#comments Mon, 16 Oct 2017 14:39:13 +0000 http://www.lloydosullivan.co.uk/blog/?p=778 yourwealth
Families shying away from difficult conversations

If you have significant assets, you may be wondering whether Inheritance Tax (IHT) affects you. Worryingly, some families appear to be shying away from difficult conversations, as almost half (47%) of UK adults say they have never discussed inheritance matters, according to new research[1].

IHT receipts increased by 22.9% in the first quarter of this tax year, according to data from the Office for National Statistics. The figures show more than £2 billion has been taken from people’s estates in IHT since March.

Extremely emotional subject

Talking about estate planning is an extremely emotional subject, as people generally don’t like talking about money or death. However, the research shows that around one in ten people would like to talk about it but haven’t found the right time, and some people just don’t know where to start (7%).

When someone dies, the value of their estate becomes liable for IHT. Everyone is entitled to pass on assets of up to £325,000 IHT-free. This is called the ‘nil-rate band’. It hasn’t changed since 2009 and will remain frozen until 2021. Any excess above £325,000 is taxed at 40%.

Residence nil-rate band

The new £100,000 residence nil-rate band was introduced in April 2017. It will increase in steps to £175,000 in April 2020, so married couples or registered civil partners with children will be able to pass on up to £1 million IHT-free. The residence nil-rate band is only available when passing on the family home to a direct descendent, so it is important to consider structuring your estate to make the most of these allowances

The research of 4,000 UK adults shows that a quarter (26%) of people say they haven’t discussed the subject with loved ones because they’re not old, so it’s not a priority. However, age isn’t the only factor preventing people from talking about inheritance, as one in seven (14%) say they don’t like talking about death, and one in ten (11%) say they avoid it because it’s a morbid subject.

Talking to loved ones

While more than a third (36%) of people say they don’t feel comfortable talking about their legacy, there are some life events that may prompt people to talk to loved ones about this important subject, such as a health scare (52%), a near-death experience (46%) and getting older (46%).

There are also some people who hold the key to unlocking inheritance conversations. After their partner or spouse (32%), people feel most comfortable talking to their mum (8%) or a financial adviser (8%) in the first instance.

Passing on wealth

Of those who have broached the subject, most (36%) have talked about passing on wealth when they die, a quarter (26%) have discussed Will writing, and one in five (18%) have discussed passing on personal items such as jewellery and photos. One in ten (10%) say they have talked about which belongings they want to give to loved ones while alive.

The research suggests that as people live longer and have healthier lives, many may be torn between the desire to help loved ones while also maintaining their own financial independence. Those who have a plan estimate that 65% of their wealth will be needed to cover their ‘cost of living’, leaving them able to pass on a quarter (25%) to loved ones in a will and to share 10% with their family as a ‘living legacy’ while they are alive.

Retirement or later-life care

Gifting wealth – whether it is money, property or family heirlooms – is important to Britons, with half (45%) hoping to pass on a legacy to loved ones. The research shows that the most common reason over-50s choose to pass on wealth after they have died is because they are worried they won’t have enough money to fund retirement or later-life care (52%). Other reasons include wanting to help family members even if they’re not here to see them receive it (47%), and leaving younger family members something to remember them by (26%).

Those over 50 opting for a living legacy are motivated by the thought of being around to watch loved ones benefit from their wealth (49%) and thinking that younger family members need the money more than they do (23%). One in eight (12%) also see the financial benefits of gifting money while they’re alive and plan to do so for tax reasons.

Providing financial support

In fact, more people are stepping in and providing financial support to family members this year, compared to last year. For instance, 59% intend to fund family weddings and deposits for first homes in 2017, compared to 52% of people in 2016[2].

5 conversational topics about inheritance to have with your loved ones

1. The importance of an up-to-date Will

When you are making a Will, this is a good time to talk to your family about your wishes. The research found just four in ten (40%) of over-55s have an up-to-date and valid Will.

2. Take advantage of the gift allowance

You can give away £3,000 each year, and this will not be subject to IHT. In addition, parents can gift £5,000 to each child as a wedding gift, while grandparents can give £2,500. However, the research shows one in three people don’t know how much you can gift each year without having to pay IHT.

Gifting money regularly throughout the year can be a great way to financially help loved ones, and it can also reduce your IHT liability. Some people will find it hard asking for money, so try and speak to your children and grandchildren to find out if you can help them with something specific, such as a new car or school fees.

3. Let life events help you start a conversation

The research shows that some life events, such as a health scare, could prompt people to talk to their loved ones about inheritance matters. However, there are some positive events, like a birth in the family or getting married, that can also make people evaluate their plans. Use these opportunities as a way of talking to relatives about how you would like to pass on your wealth.

4. Talk about later-life care

Social care is a much-talked-about topic, and many people are worried about how they will pay for care when they get older. As a result, people may be starting to plan for this earlier than previous generations. It’s important to talk to your family about the care you want so they stay true to your wishes. This could be the perfect time to introduce the subject of inheritance, as estate planning and later-life care go hand in hand.

5. Talk about family heirlooms

If you find it hard to approach the subject of estate planning with your family, then a good place to start could be talking about family heirlooms. People love to hear stories about older relatives, even if they never had the chance to meet them. Talking about items that are important to you or were important to other family members can be a great way to start a conversation about estate planning.

Looking to secure more of your wealth for your loved ones?

Planning for what will happen after your death can make the lives of your loved ones much easier. To discuss putting in place an estate plan to reduce or mitigate Inheritance Tax, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk – don’t leave it to chance.

Source data:

[1] Brewin Dolphin

[2] YouGov surveyed 10,951 UK adults online between 10 and 16 August 2016

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