News

The government’s recognised retirement age is moving further away from public perceptions of the ideal point to stop work.

Recent research by Aviva revealed that age 60 is the most popular target age for early retirement. Coincidentally, that research was published a couple of weeks after the government launched a second review of State Pension Age (SPA). The current SPA for men and women is 66, rising to 67 between 2026 and 2028.

Changes to life expectancy

The cost of living squeeze looks likely to be further constricted from April as rising taxes bite. How can you plan for the effect?

The biggest change is to National Insurance contributions (NICs). From 6 April these will increase by 1.25 percentage points across the board. For employees the main rate of NI will increase from 12% to 13.25%.

The new rate will be applied on income between £9,880 and £50,270. Anything over this will be subject to a 3.25% NI charge. The government has also increased the self-employed main rate NI contributions, which go up to 10.25%.

After years of slumber, the inflation dragon is stirring. Are you prepared to meet the challenge?

CPI annual inflation reached 5.4% in 2021. Twelve months earlier the rate was just 0.6%. The sudden return of inflation has surprised many, including the Bank of England. It is now busy raising interest rates. But what should you be doing?

Check your protection

The question marks hanging over inheritance tax (IHT) have disappeared, but as the impact of the tax on families and individuals is growing, there are strategies to mitigate your liability.

When the then Chancellor, Philip Hammond, asked the Office of Tax Simplification (OTS) back in January 2018 to consider how to simplify IHT, two reports followed. The second, issued in July 2019, proposed a range of significant reforms to IHT. Then all went silent. 

Like many areas of life, personal finance has its own set of myths. Spring is a good time to clear up some common misunderstandings.

Myth 1: Maybe past performance is a reliable indicator of future performance

The 2022/23 tax year has only just started, but you should already start thinking about how you’ll use your allowances over the next 12 months. It can help maximise your assets.

In the 2022/23 tax year you can deposit up to £20,000 into ISAs. If you don’t use this allowance before the end of the tax year, you lose it. You can save or invest tax-efficiently through an ISA, so making full use of your allowance can help your money go further.

Over the last two years, investors have experienced a lot of volatility. If you’ve been tempted to change long-term plans, data can highlight why you shouldn’t panic.

At the start of the Covid-19 pandemic, markets fell sharply, and investors continued to experience volatility as the situation and restrictions changed. Just as things were slowly getting back to “normal”, tensions with Russia began to rise and stock markets reacted strongly when Russia invaded Ukraine in February.

When you retire, your income may be coming from multiple sources, and it may not be regular. This can lead to some retirees being overtaxed. While you can claim back overpaid tax, it could affect your plans and you may not realise you’ve paid too much.

Understanding your tax liability can help you manage your budget and income in retirement.

Retirees have overpaid around £835 million in tax since 2015

If you’re nearing retirement, you may be starting to think about planning the next stage of your life.

What steps spring to mind? You may prioritise organising your pension, claiming your State Pension, or reviewing how much you have in a savings account. These steps are important for creating security, yet good retirement planning goes further than your finances.

So, what should retirement planning include? Setting out lifestyle goals is crucial for building a retirement plan that means you get the most out of your life.

If you opened a defined contribution (DC) pension in the 1990s or 2000s, the charges you’re paying could be higher than comparable pensions opened more recently. Between now and your retirement, the difference could add up to thousands of pounds.