Lloyd O Sullivan http://www.lloydosullivan.co.uk/blog Our Blog Mon, 23 Apr 2018 07:00:14 +0000 en-US hourly 1 Financial freedom http://www.lloydosullivan.co.uk/blog/financial-freedom-2/ http://www.lloydosullivan.co.uk/blog/financial-freedom-2/#comments Mon, 23 Apr 2018 07:00:14 +0000 http://www.lloydosullivan.co.uk/blog/?p=976 Deciding what to do with pension savings – even if you’re still working

It might seem like a far-off prospect, but knowing how you can access your pension pot can help you understand how best to build for the future you want when you retire.

On 6 April 2015, the Government introduced major changes to people’s defined contribution (DC) private pensions. Once you reach the age of 55 years, you now have much more freedom to access your pension savings or pension pot and to decide what to do with this money – even if you’re still working.

Depending on the scheme, you may be able to take cash lump sums, a variable income through drawdown (known as ‘flexi-access drawdown’), a guaranteed income under an annuity, or a combination of these options. This means being faced with the choice of deciding how much money to take out each year and setting an appropriate investment strategy. It goes without saying that your income won’t last as long if you take a lot of money out of the pension pot early on.

What are your retirement income options?

There are many things to consider as you approach retirement. You need to review your finances to ensure your future income will allow you to enjoy the lifestyle you want. You’ll also be faced with a number of different options available for accessing your pension. Being faced with such an important decision, it’s essential you obtain professional financial advice and guidance. We’ve provided an overview of the main options.

Keep your pension pot where it is

You can delay taking money from your pension pot to allow you to consider your options. Reaching age 55 or the age you agreed with your pension provider to retire is not a deadline to act. Delaying taking your money may give your pension pot a chance to grow, but it could go down in value too.

Receive a guaranteed income for life

A lifelong, regular income (also known as an ‘annuity’) provides you with a guarantee that the income will last as long as you live. A quarter of your pension pot can usually be taken tax-free, and any other payments will be taxed.

Receive a flexible retirement income

You can leave your money in your pension pot and take an income from it. Any money left in your pension pot remains invested, which may give your pension pot a chance to grow, but it could go down in value too. A quarter of your pension pot can usually be taken tax-free, and any other withdrawals will be taxed whether you take them as income or as lump sums. You may need to move into a new pension plan to do this. You do not need to take an income.

Take your whole pension pot in one go

You can take the whole amount as a single lump sum. A quarter of your pension pot can usually be taken tax-free – the rest will be taxed. You will need to plan how you will provide an income for the rest of your retirement.

Take your pension pot as a number of lump sums

You can leave your money in your pension pot and take lump sums from it as and when you need until your money runs out or you choose another option. You can decide when and how much to take out. Any money left in your pension pot remains invested, which may give your pension pot a chance to grow, but it could go down in value too. Each time you take a lump sum, normally a quarter of it is tax-free and the rest will be taxed. You may need to move into a new pension plan to do this.

Choose more than one option and combine them

You can also choose to take your pension using a combination of some or all of the options over time or over your total pot. If you have more than one pot, you can use the different options for each pot. Some pension providers or advisers can offer you an option that combines a guaranteed income for life with a flexible income.

Significant effect on the amount of income available

The earlier you choose to access your pension pot, the smaller your potential fund and income may be for later in life. This could have a significant effect on the amount of income available to you, meaning it may be less than it could have been, and it could run out much earlier than expected.

Taking an appropriate income or money from your pension is very complex. We’ll help you access your options. Remember: if you choose to only withdraw some of your money, what’s left will remain invested and could go down as well as up in value. You could also get back less than has been invested. Also, if you buy an income for life, you can’t generally change it or cash it in, even if your personal circumstances change. And the inheritance you can pass on depends on what you decide to do with your pension money.

Expert and professional advice is the key

You don’t have to do anything with your pension savings when you reach age 55. If you don’t need the money yet, you can leave it where it is. But whatever your future plans are, it’s essential to receive expert and professional advice. To review your situation and consider the ways we can to help you make the most of your retirement income, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk – we look forward to hearing from you.

A PENSION IS A LONG-TERM INVESTMENT. THE FUND VALUE MAY FLUCTUATE AND CAN GO DOWN, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.

PENSIONS ARE NOT NORMALLY ACCESSIBLE UNTIL AGE 55. YOUR PENSION INCOME COULD ALSO BE AFFECTED BY INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS. THE TAX IMPLICATIONS OF PENSION WITHDRAWALS WILL BE BASED ON YOUR INDIVIDUAL CIRCUMSTANCES, TAX LEGISLATION AND REGULATION, WHICH ARE SUBJECT TO CHANGE IN THE FUTURE.

THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED.

PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.

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Protecting your estate for future generations http://www.lloydosullivan.co.uk/blog/protecting-your-estate-for-future-generations/ http://www.lloydosullivan.co.uk/blog/protecting-your-estate-for-future-generations/#comments Tue, 17 Apr 2018 09:00:40 +0000 http://www.lloydosullivan.co.uk/blog/?p=972 Many individuals find the Inheritance Tax rules too complicated

If you struggle to navigate the UK’s Inheritance Tax regime, you are not alone. Whether you are setting up your estate planning or sorting out the estate of a departed family member, the system can be hard to follow. Getting your planning wrong could also mean your family is faced with an unexpectedly high Inheritance Tax bill.

Reluctant to seek professional advice

Findings from a recent survey[1] revealed that many individuals find the Inheritance Tax rules too complicated, but the majority are reluctant to seek professional advice. The research revealed that over three quarters (77%) think the UK’s Inheritance Tax rules are too complicated. Yet despite this, only a third (33%) have sought professional advice on Inheritance Tax planning.

We understand that ensuring your Inheritance Tax planning is tax-efficient is a sensitive subject, and as a result planning opportunities can be missed. Early preparation is the key to success. Taking advantage of alternative methods to secure wealth and to shelter your estate will ensure that more wealth can be passed onto the next generation.

Exempt from Inheritance Tax

Every individual in the UK, regardless of marital status, is entitled to leave an estate worth up to £325,000. This is known as the ‘nil-rate band’. Anything above that amount is taxed at a rate of 40%. If you are married or in a registered civil partnership, then you can leave your entire estate to your spouse or partner. The estate will be exempt from Inheritance Tax and will not use up the nil-rate band.

Instead, the unused nil-rate band is transferred to your spouse or registered civil partner on their death. This means that should you and your spouse pass away, the value of your combined estate has to be valued at more than £650,000 before the estate would face an Inheritance Tax liability.

Here’s our snapshot of the main Inheritance Tax areas you may wish to consider and discuss further with us.

Steps to mitigate against Inheritance Tax

Make a Will

Dying intestate (without a Will) means that you may not be making the most of the Inheritance Tax exemption which exists if you wish your estate to pass to your spouse or registered civil partner. For example, if you don’t make a Will, then relatives other than your spouse or registered civil partner may be entitled to a share of your estate, and this might trigger an Inheritance Tax liability.

Residence nil-rate band

If you’re worried that rising house prices might have pushed the value of your estate into exceeding the nil-rate band, then the new ‘residence nil-rate band’ could be significant. From 6 April 2017, it can now be claimed on top of the existing nil-rate band. It starts at £100,000 per person and will increase annually by £25,000 every April until 2020, when the £175,000 maximum is reached.

Make lifetime gifts

Gifts made more than seven years before the donor dies, to an individual or to a bare trust (see types of trust), are free of IHT. So it might be wise to pass on some of your wealth while you are still alive. This will reduce the value of your estate when it is assessed for IHT purposes, and there is no limit on the sums you can pass on. You can gift as much as you wish – this is known as a ‘Potentially Exempt Transfer’ (PET).

However, if you live for seven years after making such a gift, then it will be exempt from Inheritance Tax. However, should you be unfortunate enough to die within seven years, then it will still be counted as part of your estate if it is above the annual gift allowance. You need to be particularly careful if you are giving away your home to your children with conditions attached to it, or if you give it away but continue to benefit from it. This is known as a ‘Gift with Reservation of Benefit’.

Leave a proportion to charity

Being generous to your favourite charity can reduce your Inheritance Tax bill. If you leave at least 10% of your estate to a charity or number of charities, then your Inheritance Tax liability on the taxable portion of the estate is reduced to 36% rather than 40%.

Set up a trust

Family trusts can be useful as a way of reducing Inheritance Tax, making provision for your children and spouse, and potentially protecting family businesses. Trusts enable the donor to control who benefits (the beneficiaries) and under what circumstances, sometimes long after the donor’s death. Compare this with making a direct gift (for example, to a child) which offers no control to the donor once given. When you set up a trust, it is a legal arrangement, and you will need to appoint ‘trustees’ who are responsible for holding and managing the assets. Trustees have a responsibility to manage the trust on behalf of and in the best interest of the beneficiaries, in accordance with the trust terms. The terms will be set out in a legal document called ‘the trust deed’.

Types of trust you might consider

Bare (Absolute) Trusts

The beneficiaries are entitled to a specific share of the trust, which can’t be changed once the trust has been established. The settlor (person who puts the assets in trust) decides on the beneficiaries and shares at outset. This is a simple and straightforward trust – the trustees invest the trust fund for the beneficiaries but don’t have the power to change the beneficiaries’ interests decided on by the settlor at outset. This trust offers potential Income Tax and Capital Gains Tax benefits, particularly for minor beneficiaries.

Life Interest Trusts

Typically, one beneficiary will be entitled to the income from the trust fund whilst alive, with capital going to another (or other beneficiaries) on that beneficiary’s death. This is often used in Will planning to provide security for a surviving spouse, with the capital preserved for children. It can also be used to pass income from an asset onto a beneficiary without losing control of the capital. This can be particularly attractive in second marriage situations when the children are from an earlier marriage.

Discretionary (Flexible) Trusts

The settlor decides who can potentially benefit from the trust, but the trustees are then able to use their discretion to determine who, when and in what amounts beneficiaries do actually benefit. This provides maximum flexibility compared to the other trust types, and for this reason is often referred to as a ‘Flexible Trust’.

Time to evaluate whether or not Inheritance Tax could become payable?

When someone dies, Inheritance Tax needs to be considered. Without the right professional advice and careful financial planning, HM Revenue & Customs can become the single largest beneficiary of your estate following your death. To evaluate whether or not Inheritance Tax could become payable, all of your assets you hold at the date of death need to be valued, and reliefs and exemptions determined. Don’t leave it to chance – contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk for a review of your situation.

Source data:

[1] Canada Life’s annual Inheritance Tax monitor survey of 1,001 UK consumers aged 45 or over with total assets exceeding the individual Inheritance Tax threshold (nil-rate band) of £325,000. Carried out in October 2017.

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Making the most of your pensions http://www.lloydosullivan.co.uk/blog/making-the-most-of-your-pensions/ http://www.lloydosullivan.co.uk/blog/making-the-most-of-your-pensions/#comments Mon, 16 Apr 2018 14:12:56 +0000 http://www.lloydosullivan.co.uk/blog/?p=970 Have you accumulated multiple plans that need reviewing?

By the time we have been working for a decade or two, it is not uncommon to have accumulated multiple pension plans. There’s no wrong time to start thinking about pension consolidation, but you might find yourself thinking about it if you’re starting a new job or nearing retirement.

Consolidating your pensions means bringing them together into a new plan, so you can manage your retirement saving in one place. It can be a complex decision to work out whether you would be better or worse off combining your pensions, but by making the most of your pensions now, this could have a significant impact on your retirement.

Retirement savings in one place

Whenever you decide to do it, when you retire it could be easier having a single view of all of your retirement savings in one place. However, not all pension types can or should be transferred. It’s important that you obtain professional advice to compare the features and benefits of the plan(s) you are thinking of transferring.

Some alternative pension options may offer the potential for a better investment return than existing pensions – giving the opportunity to boost savings in retirement, without saving any more. In addition, some people might benefit from moving their money to a pension that offers funds with less risk – which may not have been available before. This could be particularly important as someone moves towards retirement, when they might not want to take as much risk with their money they’ve saved throughout their working life.

Keeping track of the charges

If someone has several different pensions, it can be difficult to keep track of the charges they’re paying to existing pension providers. By combining pensions into a new plan, lower charges could be available – providing the opportunity to further boost retirement savings. However, it’s important to fully understand the charges on existing plans before considering consolidating pensions.

Combining pensions into one pot also reduces paperwork and makes it easier to estimate the income someone can expect to receive in retirement. However, before the decision is made to consolidate pensions, it’s essential to make sure there are no loss of benefits attributable to an existing pension.

Review your pension situation regularly

It’s essential that you review your pension situation regularly. If appropriate to your particular situation and only after receiving professional financial advice, pension consolidation could enable existing policies to be brought together in one place, ensuring they are managed correctly in line with your wider objectives.

Gone are the days of a job for life. So many of us may have several pensions accumulated over the years – some of which we may have left with former employers and forgotten about! Don’t forget your pension can and should work for you to provide a better quality of life when you retire. Looked after correctly, it can enable you to do more in retirement, or even start your retirement early.

Planning for life after work

Planning for retirement can leave many of us adrift. Getting to a position where you are able to make the most of life today, as well as life after work, requires a clear, realistic plan and expert execution. To find out more about how we can help you achieve the retirement you deserve, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk – we look forward to hearing from you.

A PENSION IS A LONG-TERM INVESTMENT. THE FUND VALUE MAY FLUCTUATE AND CAN GO DOWN, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.

PENSIONS ARE NOT NORMALLY ACCESSIBLE UNTIL AGE 55. YOUR PENSION INCOME COULD ALSO BE AFFECTED BY INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS. THE TAX IMPLICATIONS OF PENSION WITHDRAWALS WILL BE BASED ON YOUR INDIVIDUAL CIRCUMSTANCES, TAX LEGISLATION AND REGULATION, WHICH ARE SUBJECT TO CHANGE IN THE FUTURE.

THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED.

PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.

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Unwritten goals are just wishes http://www.lloydosullivan.co.uk/blog/unwritten-goals-are-just-wishes/ http://www.lloydosullivan.co.uk/blog/unwritten-goals-are-just-wishes/#comments Tue, 10 Apr 2018 09:00:28 +0000 http://www.lloydosullivan.co.uk/blog/?p=967 Making wise financial decisions and rewarding for your efforts

If you do not know where you are going, how will you know when you get there? This is very true about financial goals. You need to set financial goals to help you make wise financial decisions, and also as a reward for your efforts. Goals should be clear, concise, detailed and written down. Unwritten goals are just wishes.

In order to achieve all your goals, you will need a plan. Starting from assets you already have available, you will need to determine how much more you need to accumulate and when you will need it. Don’t neglect to consider that the price of your goal items might actually increase as well. Depending upon how you invest your savings over time, you might receive interest, dividends or capital gains to help you along – you should consider this as well.

Specific

Your financial and personal goals need to be as specific as possible, because otherwise they won’t give you enough direction to follow through. Look at your goals like a lamp lighting the way – the brighter the light, the clearer the road ahead. If you don’t have clearly defined goals, you procrastinate. Think about your life and what you want to achieve, and what action you need to take to achieve the outcomes you want.

Measurable

Give yourself realistic deadlines. Adding specific dates, amounts, etc. makes your progress quantifiable to complete your goal and visualise a finish line.

Attainable

Be honest with yourself and set realistic goals. Decide what you want to accomplish. So, start with the goals that are highest on your priority list. It’s easy to be overwhelmed by everything that needs to be done, so start simple. 

Relevant

Align your goals with the direction you want your life to take. Balancing the alignment between long term and short term will give you the focus you’ll need.

Time-bound

Having a finish line will mean you’ll get to celebrate when you accomplish your goal. Having set deadlines gives you a sense of urgency that is lacking when goals are open-ended.

Making additional investments

Do you have the means to make additional investments necessary to accumulate the required assets to achieve your goals? Don’t neglect to consider the effects of taxes on your savings and investments. After considering the foregoing, you might determine that you can achieve some goals in less time. Or you might find that it could take longer. The time horizon is important to setting realistic goals.

Any concerns about your retirement?

If you have any concerns about your retirement provision or would like to assess your personal circumstances to see what type of retirement income your current planning will give you once you’ve retired, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk. If your goals are out of reach, or you’re taking undue levels of risk, we’ll let you know.

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Creating a financial roadmap http://www.lloydosullivan.co.uk/blog/creating-a-financial-roadmap/ http://www.lloydosullivan.co.uk/blog/creating-a-financial-roadmap/#comments Mon, 09 Apr 2018 09:00:13 +0000 http://www.lloydosullivan.co.uk/blog/?p=965 Planning for success can be complicated in today’s world

No two people have identical financial circumstances, which is why it’s essential you have a custom financial planning solution that meets your individual needs and goals. Planning for financial success can be complicated in today’s world. A broad knowledge of everything from complex retirement and investment products to risk management strategies and tax laws is required.

Your financial roadmap should provide you with clarity about your future. It should detail every aspect of your vision – your hopes, fears and goals. It should also describe exactly how your future will look and help you to know exactly where you are headed and when you are likely to arrive.

Take some time and ask yourself these questions:

• Can I sleep comfortably knowing I’ll have enough money for my future?
• Do I have the security of knowing where I’m heading financially?
• Am I going to be able to maintain my current lifestyle once I stop working?
• Do I feel empowered financially to live the life I want today and tomorrow?
• Have I made sufficient financial plans to live the life I want and not run out of money?
• Do I have a complete understanding of my financial position?
• What is ‘my number’ to make my current and future lifestyle secure?

Understanding ‘your number’

Part of this process is to understand ‘your number’ – in other words, the amount of money you’ll ultimately need to ensure complete peace of mind in knowing your future lifestyle is secure and making sure you don’t run out of money before you run out of life.

By getting to know you and what you want to achieve, we’ll be able to provide you with a detailed action plan that is focused on you. Using a holistic financial planning process, we can get a clear view of your current lifestyle and the life you want to live.

Initially, you need to create a financial roadmap which enables you to make the right financial choices and get the balance right between current responsibilities and future aspirations. All of this should be designed in a way so that you can achieve your desired lifestyle goals and objectives reliably over time.

Looking for a clearer picture about your financial plans?

Lifestyle planning will help you stay in control of your financial future by giving a more holistic planning approach and clearer picture of the consequences of change on an ongoing basis. It also helps to give an idea of when certain key decisions should be made, such as retiring early or downsizing a property. For more information, or to discuss how we could assist you, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk.

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Stock market turbulence http://www.lloydosullivan.co.uk/blog/stock-market-turbulence/ http://www.lloydosullivan.co.uk/blog/stock-market-turbulence/#comments Wed, 04 Apr 2018 09:00:01 +0000 http://www.lloydosullivan.co.uk/blog/?p=963 Don’t let global uncertainties affect your financial planning for the years ahead

The overall direction of developed stock markets is a relentless and continual rise in value over the very long term, punctuated by falls. It’s important not to let global uncertainties affect your financial planning for the years ahead. Individuals who stop their investment planning, particularly during market downturns, can often miss out on opportunities to invest at lower prices.

Such volatility is less frightening if you take a longer-term view. It’s important to stick to your strategy and keep moving ahead consistently by spreading risk and growing your wealth. It’s volatility in stock markets that make investors nervous. However, on the flipside, not all volatility is bad: without volatility, stock prices would never rise.

Higher inflation and faster interest rate rises

At the time of writing this guide in February, markets had reacted to the signs of faster wage growth and a strengthening US economy that may lead to higher inflation and faster interest rate rises. The global sell-off began following a solid US jobs report that fuelled expectations that the Federal Reserve would need to raise interest rates faster than expected because of the strength of the economy. That concern prompted the pullback from stocks.

The Bank of England seemed to offer support for the view that rates in general are on an upward path with a strengthening UK economy, meaning interest rates are likely to rise sooner than the markets were expecting.

More attractive investment alternatives

A government budget proposal announced by US lawmakers to raise spending caps could also fan inflationary pressures. Rising US bond yields are another possible signal of higher rates to come, which could impact on corporate profits and curb economic activity. But at the same time, higher interest rates can make investment alternatives to stocks, such as bonds, more attractive.

In practice, everyone’s investment goals are different. By deciding on your long-term financial priorities – whether it’s funding your children’s education or saving enough to be able to retire early – you can avoid being blown off course by short-term events.

Investors should focus on long-term horizons

Trying to second-guess the impact of events such as Brexit or the recent stock market correction – or even attempting to make a bet on them – rarely pays off. Instead, investors who focus on long-term horizons – at least five to ten years – have historically fared much better.

Sensible diversification – owning a mix of assets, including shares, bonds and alternative investment such as property – can help protect investors over the long term. When one area of a portfolio underperforms, another part should provide important protection – and it’s never too early or too late to start taking this considered and strategic approach.

Protecting your investment portfolio, what you need to consider

Media frenzy

Volatility, risk and market declines are a normal part of the investing cycle, but the media likes drama. Reports will use words that make these market fluctuations sound alarming, so be cautious about reacting to the unnerving 24/7 news cycle.

Stay strategic

If you have a well-diversified portfolio, then it’s more important than ever to stay the course. You have a strategy in place that reflects your risk tolerance and timeline, so stay committed. However, if you reacted and sold in a previous market decline or have not implemented a strategic asset allocation, then now is the time to have a discussion about your investment options.

Stay calm

Be aware of the psychological affect this type of volatility has on you as an investor, and resist the urge to be reactive. The recent decline was expected and is coming after financial markets as a whole have experienced a historic bull phase for close to ten years now.

Stay focused

No one knows how severe any market turbulence will be or what the market will do next. It could be over quickly or linger for a while. But no matter what lies ahead, proper diversification and perseverance over the long term are what’s most important.

It’s about achieving a good balance

There are many ways that you can invest, and while we all want our money to grow, it’s important to think about the level of risk you might be willing to take with your hard-earned money. It’s about achieving a good balance. To discuss your future investment objectives or review your current portfolio, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk.

INFORMATION IS BASED ON OUR CURRENT UNDERSTANDING OF TAXATION LEGISLATION AND REGULATIONS. ANY LEVELS AND BASES OF, AND RELIEFS FROM, TAXATION ARE SUBJECT TO CHANGE.

THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED.

PAST PERFORMANCE IS NOT A RELIABLE INDICATOR OF FUTURE PERFORMANCE.

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Income Protection http://www.lloydosullivan.co.uk/blog/income-protection-2/ http://www.lloydosullivan.co.uk/blog/income-protection-2/#comments Tue, 03 Apr 2018 14:35:37 +0000 http://www.lloydosullivan.co.uk/blog/?p=961 Financial resilience and peace of mind for individuals and households

If you were one of the million people in the UK each year that find themselves unable to work due to a serious illness or injury, how would you cope financially? The Association of British Insurers 2017 findings highlight the fact that of these, many find it difficult to survive on their savings or on sick pay from work.

Serious illness or injury can occur at any time and will inevitably cause strain on families financially, as well as personally. Income Protection insurance (also known as ‘IP insurance’) is designed to provide cover if you can’t earn an income for a number of specified reasons. It provides a financial resilience to individuals and households and gives peace of mind.

Help to support you financially

If something happened to you, would you be able to survive on your savings or on sick pay from work? If not, Income Protection is an alternative way to keep paying the bills. But it’s important to remember that Income Protection only covers you if you’re unable to work due to illness or injury – it does not pay out if you are made redundant.

This type of insurance covers most illnesses that leave you unable to work. What that means, exactly, depends on your individual policy. For example, it may cover you if you are unable to work due to a stress-related illness or a serious heart condition.

Potentially financially vulnerable

In Britain today, there are over three million working couples classed as ‘double income, no option’ (DINOs), which means they are potentially financially vulnerable if one of the two loses their earnings.

The typical household today looks very different from the traditional image of a working family made up of one primary breadwinner and one homemaker. Nowadays, many households instead rely on two incomes to maintain their lifestyle, or even just to get by. Of the two thirds of Britons who are living as part of a couple, half (51%) are both currently working. Yet, without adequate savings or protection insurance, millions could be at risk financially if one of the main earners was unable to work for a period of time.

Dependent on two incomes

Research by LV= has found that there are 3.2 million working couples in Britain that would be classed as DINOs. This means they are dependent on two incomes to make ends meet and would struggle to cope if they lost one of their incomes. The Money Advice Service (MAS) recommends the provision of 90 days’ worth of outgoings in savings to protect against a financial shock.

The lack of savings may be down to people simply not being able to afford to put money aside. A quarter (27%) of working couples surveyed say their double wage isn’t stretching as far as it did this time last year. However, not having a back-up source of money leaves many couples at a high risk of financial difficulty if one person couldn’t work for a period of time.

Level of financial pressure

The level of financial pressure is also clear in the numbers who anticipate they’ll be working for many years to come. Of couples who both work, three in five (58%) wouldn’t choose to work if they didn’t have to, while over half (54%) say the same of their partner. Three in ten (30%) people in a working couple expect that both they and their partner will have to work until retirement to make ends meet, while one in five (21%) think both of them will actually need to work throughout retirement.

Millions of couples need both incomes to pay the bills, with a significant proportion saying they’d have to make major changes if they had to rely on one income. And the impact of losing an income is not just financial. Two in five (42%) people in a couple say that if one of them couldn’t work, it would strain their relationship.

Few have income protection

Despite the reliance so many households have on both incomes, worryingly few have Income Protection insurance, leaving them vulnerable if one member of the household was unable to work for a period of time. Three in five (59%) say that neither they nor their partner has any form of income protection.

If your household is reliant on two incomes to make ends meet, it’s important to consider how you would survive financially and emotionally if you were forced to live off one income. With so many households now relying on two salaries to get by, it has never been more important for couples to protect their joint incomes.

Much-needed boost to your financial resilience

Income Protection insurance is one way for people to equip themselves should they find themselves unable to work for a period of time. It can be an affordable and valuable safety net that can provide a much-needed boost to their financial resilience. If you have any concerns or would like to review your options, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk – we look forward to hearing from you.

Source data:

Research conducted by LV= published 17/1/2018

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How to make the most of your retirement http://www.lloydosullivan.co.uk/blog/how-to-make-the-most-of-your-retirement/ http://www.lloydosullivan.co.uk/blog/how-to-make-the-most-of-your-retirement/#comments Tue, 27 Mar 2018 09:00:59 +0000 http://www.lloydosullivan.co.uk/blog/?p=944 make the most of your retirement
Steps you could take to increase your eventual income

Even if retirement isn’t far away, there are steps you could take to increase your eventual retirement income. This applies both to your State Pension entitlement as well as to any personal or workplace pension pots. We’ve provided some areas to consider that you may wish to discuss with us to help you to meet your retirement goals.

Make sure you have details for all your pension pots

Locate pension pots that you may have forgotten about. The Pension Advisory Service and the Pension Tracing Service can help you to trace forgotten pension pots. Remember to take your State Pension into account. Check your State Pension entitlement to help determine if and how much you’re likely to receive when you reach State Pension age – and whether you’ll need to top it up.

Consider topping up your pensions

Think about topping up your pension in the years leading up to your retirement – that little bit extra could make a difference. Remember, you might be eligible to top up your State Pension too. This could be particularly beneficial if you’re self-employed or a woman, because it’s possible your State Pension entitlement may be low.

From age 55, you can draw your pension savings as and when you need it and still pay into your pension. You’ll continue to receive tax relief on your payments up to age 75, although taking benefits flexibly will limit how much you can put in.

Maximise your employer’s contributions

You and your employer must pay a percentage of your earnings into your workplace pension scheme. How much you pay and what counts as earnings depend on the pension scheme your employer has chosen. Ask your employer about your pension scheme rules.

In most automatic enrollment schemes, you’ll make contributions based on your total earnings between £5,876 and £45,000 a year before tax. When you increase your contributions to a workplace pension or private pension, some employers will also boost the amount they contribute.

National Insurance credits

National Insurance credits allow you to fill in gaps on your National Insurance record when you’re not working and unable to make National Insurance contributions – for example, if you’re unemployed, caring for children, ill or disabled, taking an approved training course or doing jury service. The credits go towards building qualifying years for your State Pension and could help boost your final entitlement.

Redirect regular spending into your pension

If you have a regular expense that stops being needed, you could redirect that extra money to your pension instead. As an example, once you finish paying off a car loan, you can use those payments towards your pension fund. This is a quick and simple way to give your retirement savings a boost while sticking to your everyday budget.

Save any income increases

If your income rises – for example, due to a pay rise or a new income stream – put all or part of the sum towards increasing your retirement savings. This can be done in a number of ways, including by increasing the sum you contribute to a workplace or personal pension.

Carry forward tax reliefs

Carry forward allows you to make use of any annual allowance that you may not have used during the three previous tax years, provided that you were a member of a registered pension scheme. The current annual allowance is £40,000, so you might be able to boost your pension by up to £120,000 without incurring tax.

Consolidate your pensions

If you have paid into several different pensions over the years and find it hard to stay on top of all the paperwork, you could consider consolidating your pensions into one plan. This will also help to keep track of your overall retirement sum and whether or not you’re on track towards your targets.

Before you switch, it is essential to obtain professional advice to check that you don’t have any guarantees that you’ll lose by moving your pension savings to another scheme, and that the charges you pay aren’t higher in the new scheme. Not all pension types can or should be transferred. It’s important that you know and compare the features and benefits of the plan(s) you are thinking of transferring.

Consider retiring a little later than you’d originally planned

Delaying your retirement might give your pension fund more chance to grow. Remember though, if your pension fund remains invested, the value could go down as well up and you may not get back what you put in. If you defer your retirement, it’s also important to check whether this will affect any state benefits you’re entitled to.

Working part-time for a while after you finish full-time work might enable you to delay drawing money from your pension or your State Pension, meaning your money may last longer when you do retire.

You could consider trying something new, like setting up your own business. Becoming your own boss could be a good way to stay active and keep earning.

The longer you put it off, the smaller your eventual income could be

Planning for retirement can be a daunting prospect, especially when it comes to your pension. But the longer you put it off, the smaller your eventual income could be. To ensure you make the most of your money in retirement and enjoy the lifestyle you’d always hoped for, we’ll make sure you find the right options for you – to see how you could give your pension a boost, please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk.

PENSIONS ARE A LONG-TERM INVESTMENT. THE RETIREMENT BENEFITS YOU RECEIVE FROM YOUR PENSION PLAN WILL DEPEND ON A NUMBER OF FACTORS, INCLUDING THE VALUE OF YOUR PLAN WHEN YOU DECIDE TO TAKE YOUR BENEFITS, WHICH ISN’T GUARANTEED, AND CAN GO DOWN AS WELL AS UP. THE VALUE OF YOUR PLAN COULD FALL BELOW THE AMOUNT(S) PAID IN.

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Life events http://www.lloydosullivan.co.uk/blog/life-events/ http://www.lloydosullivan.co.uk/blog/life-events/#comments Mon, 26 Mar 2018 09:00:54 +0000 http://www.lloydosullivan.co.uk/blog/?p=942 lifeevents
What will influence your retirement income needs?

Retirement is a time for you to do the things you’ve always wanted. When considering your retirement income needs, you need to consider the types of events you would like to happen after you retire that may impact your budget. Thinking about these early could help you when you’re deciding the best way to take your pension savings.

Perhaps you’re looking forward to having more time to explore faraway places. Or maybe you dream of simply waking up each day and doing whatever takes your fancy. However you see your future, retirement is a time for you to do the things you’ve always wanted to do.

Concept of retirement

The very concept of retirement has changed. ‘Phased retirement’ is becoming more common; the way we access our pension is now a lot more flexible, and in the UK we’re living longer than ever before. A longer retirement and more choice over how you take your pension require planning ahead to help ensure you’re on track to a financially secure future.

Working habits

Although you may have retired from full-time employment, perhaps you may wish to earn money from part-time work. Besides the State Pension, consider any other income sources you’ll have when you finish working full-time and find out when they commence.

Supporting your family

Perhaps you have children or grandchildren that you plan to help through further education. How will you provide this financial support once you’ve retired? Some people intend to help their children onto the property ladder. Have you made a plan for how you’ll afford this?

Health

Leading a healthy lifestyle can help ensure you’ll be fighting fit during your retirement. However, ill health can strike at any time. And although you may not like to think about it, it’s important to factor things like medical costs into your financial planning.

In the longer term, you may also need to pay for residential care for yourself, your partner or your parents.

Savings and property

The amount you have in savings may influence what you’ll need from your pension. Is this enough to live on?

If you own a home, you may have decided that you’ll sell your home and move somewhere that better suits your lifestyle needs. You’ll also need to think about how you would pay for a new property, and factor in any repair costs to a new or existing home.

How you choose to take your pension

The way you choose to take your pension can impact things like your tax position or pension allowances. If you choose to move provider, you may lose any guarantees that you may have with your existing pension provider. You should also think about the impact of taking any tax-free cash, income or lump sums may have on any means-tested benefits you currently receive.

The effects of inflation

The effects of inflation may reduce the buying power of your savings and investments in the future, so think about how you’ll maintain your lifestyle if your money doesn’t stretch as far.

What to do with your pension is a big decision

The ways that you can take your pension savings changed in April 2015, giving you greater choice over how you can access and use the money you’ve saved up. Deciding what to do with your pension is a big decision. If you’re looking for further information or want to review your options, we can help. Please contact Lloyd O’Sullivan on 0208 941 9779 or email info@lloydosullivan.co.uk.

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Beware of the scammers http://www.lloydosullivan.co.uk/blog/beware-of-the-scammers/ http://www.lloydosullivan.co.uk/blog/beware-of-the-scammers/#comments Wed, 21 Mar 2018 11:12:59 +0000 http://www.lloydosullivan.co.uk/blog/?p=946 scammer
Fraudsters employ increasingly advanced psychological tactics to persuade victims to invest

An estimated £1.2bn is lost to investment scams each year, with share sales, wine investments, land banking and carbon credits commonly used by fraudsters to target potential investors. A recent study by Citizen’s Advice found nine out of ten people would fail to spot common warning signs of a pension scam, such as unusually high investment returns, cold calling and offers of free financial advice.

It’s very important to remain vigilant when you are looking to access the money you have invested. Last year, victims of investment fraud lost on average £32,000 as fraudsters employed increasingly advanced psychological tactics to persuade victims to invest.

So what is an investment scam?

Investment scams are a form of fraud where there is a high risk that you could lose some, or all, of your money. Often, the investment opportunities that scammers offer don’t really exist – or don’t have the rewards being promised. Scammers can appear professional and trustworthy, so even experienced investors may fall victim to these schemes.

How to spot an investment scam

Scammers are always changing their tactics, so the following are some of the red flags that could help you to spot an investment scam:

• Be vigilant – if a phone call or voicemail, email, or text message asks you to make a payment, log in to an online account or offers you a deal, be extremely cautious. Financial institutions, banks and online retailers never email you for passwords or any other sensitive information by requesting that you click on a link and visit a website. If you get a call from someone who claims to be from your bank, don’t give away any personal details.
• Scammers often use very convincing tactics to get you to sign up. Beware of anyone trying to pressurise you into making a decision.
• Scammers will make an investment sound very appealing and will often suggest that it’s less risky than it is.
• Offers made by scammers often sound too good to be true. For example, you might be offered better interest rates or returns than you’ve seen elsewhere.
• Scammers are persistent and will often try to form a relationship with you in an effort to build your trust. Beware of anyone who calls you repeatedly and/or anyone who tries to keep you on the phone for long periods of time.
• You might be told that you’re receiving a very special and/or limited offer.
• You might be told not to tell anyone about the offer you’ve been given. But talking with trusted friends and family about any investment offer you’ve been given could help you spot a scam.
• Fraudsters are known to target previous victims of investment fraud, claiming that they can recover lost money. You might be asked to pay an upfront fee, but these companies will not get back your money.
• Some companies that run scams base themselves overseas in order to avoid regulatory requirements. Be cautious if a company that is based overseas contacts you with investment opportunities.

How to protect yourself from investment scams

• Get to know the red flags above that could suggest a scam. The Financial Conduct Authority ScamSmart website offers helpful support about what you can do to spot investment fraud.
• More information about pension scams can be found at www.pension-scams.com – check out the leaflet there.
• Make sure that the company or financial adviser you’re dealing with is authorised by the UK Regulator – the Financial Conduct Authority (FCA). You can check their Financial Services Register and get more information on unauthorised firms overseas.
• The FCA also have a warning list that you can check to help stay ‘scam smart’ before you go ahead with any investment.
• Reject any cold calls that you receive, and please don’t give out any personal or financial information until you are sure you are dealing with a reputable company.
• Useful information to help protect you from scammers can be found on The Pensions Regulator website.
• You can report fraud and cyber crime via ActionFraud, the UK’s national fraud and cyber crime reporting centre.
• Keep up to date with the latest scams and fraud warnings with useful advice at Age UK.

Remember to trust your instincts. If you think the offer sounds too good to be true, it probably is!

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