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If you lived to be 90, will your pension be sufficient?

If you lived to be 90, will your pension be sufficient?

According to the Office for National Statistics the average life expectancy at birth for a UK male is 79.2 and 82.9 for their female counterparts. However, in 2017 alone there were 579 776 people aged 90 which begs the question, will your pension be enough if you lived to be 90?

Saving plans, such as pensions, were developed in another time when the typical  retirement might only last a decade. Since the introduction of a UK state pension in 1908, life expectancy has increased by 36 years due to scientists tackling life shortening diseases yet the retirement age has barely changed.

Some help is available already – the government is offering a generous tax relief on pension contributions while employers will save on your behalf. It is important to start saving as early as possible as for each year you delay saving for retirement, or don’t save enough, the proportion of your annual earnings you’ll need to put aside for your “golden years” will increase.

What are your options? You can start investing into a pension scheme today and make regular contributions to it or you can also look at investing into an investment scheme that suits your risk appetite to supplement your pension income.

The good news is you don’t have to find retirement solutions by yourself, contact us for your free initial meeting today.

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And the winners are…

And the winners are...

We are delighted announce that, after being shortlisted in the Professional Adviser Firm of the Year, AWM have been chosen as the (South East) 2019, winner! It was announced on Thursday night at an awards ceremony in London.

We are thrilled to be recognised for such a prestigious national award.

In total, the services and products of more than 200 advisers and other businesses were under consideration for the 2019 Professional Adviser Awards to reward excellence both within the financial advice community and among the broader financial services sector. 

A huge thanks to our talented AWM team; without them none of this would have been possible. And of course, not forgetting the loyalty, trust and support of our clients.

Many thanks for all the congratulatory emails from those who have already heard this great news.

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What to do with a sudden windfall

What to do with a sudden windfall

When you receive a sudden windfall of money from inheritance, a gift, or for some lucky individuals out there, winning, the extra cash creates an opportunity for you to improve your financial situation. There are several steps you can take to preserve your new found wealth  and potentially set yourself up for life goals or early retirement.

Determine the tax implications

The very first step should be to consider the tax implications. Speak to your financial adviser to determine the most tax-efficient strategy.

Set up a FUNd (a small portion for fun!)

Set aside a small percentage for your enjoyment or entertainment. Generally this should not be more than 10-15% of the money.

Set up a Financial Plan

Before you make any  big decisions, create a Financial Plan for this money. If you’ve already done this, consider updating your financial goals. 

Create or update your Estate Plan

A sudden windfall is the perfect opportunity to review your Estate Plan to make sure that your money will be distributed exactly according to your wishes upon your death…and as tax efficiently as possible.

Create an Emergency Fund

An Emergency Fund is traditionally 3 – 6 months worth of your salary. This money should be put in a high yield savings account, and the money should only be accessed for true emergencies such as job loss or a medical emergency. Remember to always replenish it after you have dipped into your Emergency Fund.

Pay off or consider buying a house

If you don’t already own a home, this money may make an excellent deposit. If you purchase the house outright and have some funds remaining, consider investing the money you would’ve spent on regular mortgage payments elsewhere.

Speak to one of our financial advisers today to help you on your financial journey!

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Tax Year End is Fast Approaching

Tax Year End Is Fast Approaching

With tax year end fast approaching, it is time to capitalise on the government tax allowances
within various tax wrappers.

ISAs

The current tax free allowance for ISA investments is £20,000. There are now multiple ISAs
that you can contribute to. These are; Stocks and Shares ISA, Cash ISA, IFISA and Lifetime
ISA which all have slightly different qualifying rules. The £20,000 is a total allowance which
is accumulative across all ISAs. All of these ISAs benefit from a protected tax free wrapper,
meaning no tax on dividends, interest or growth within the account. Please speak to your
adviser should you wish to understand the options open to you with regards to ISA
contributions in this tax year.

Pension Contributions

Annual pension contributions are currently capped to your earned income to a limit of £40,000 gross*. Some individuals are
also eligible to make use of a piece of government legislation named ‘Carry Forward’ where
you can utilise previous unused annual allowance from the three previous tax years. All
pension contributions attract an immediate 20% government tax relief and more can be
claimed for higher and additional income tax payers. Due to ever changing legislation in the
pension market we recommend contributions are explored each year as part of a tax year
end exercise. Your financial adviser can provide a bespoke tax calculation on the benefits of
this for you, even if you are a non earner.
*This annual allowance is tapered down for high income earners.

Capital Gains Tax

Capital gains tax is tax on profit of an asset that has sold with a ‘gain’. The current capital
gains tax free allowance is £11,700 for individuals and £5,650 for trusts. Please speak to
your adviser if you would like to know more about your current capital gains position.

Dividend Tax

The current dividend tax free allowance is £2,000. The tax rate on dividends over your allowance depends on the income tax band that you are in. See below the break down of the tax rate on dividends for the respective tax band.

Tax Band                                              Tax Rate on Dividends over your allowance

Basic Rate                                               7.5%

Higher Rate                                            32.5%

Additional rate                                       38.1%

Inheritance Tax

The current inheritance tax free threshold is £325,000 for individuals plus a potential
£125,000 in residents nil rate band*. One way to reduce potential inheritance tax liability is to
make use of your annual gifting allowance. The gifting current allowance is £3,000 per tax
year, however if you’ve not optimised this allowance in the previous tax year you can carry it
forward.
*Residents Nil Rate Band is only applicable to some individuals. Please speak to your
adviser for more information.

Junior ISA

Save up to £4,260 in a Junior ISA for your children under 18, living in the UK. There are 2 types of Junior ISA’s, A cash Junior ISA, you wont interest on the cash you save and a stocks and shares Junior ISA, your cash is invested and you wont pay tax on any capital growth or dividends you receive. Children are able to have one or both types of Junior ISA

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AWM a finalist for “Adviser Firm of the Year” award

AWM a finalist for "Adviser Firm of the Year" award

We are delighted to announce that Ascot Wealth Management is in the running for the prestigious Professional Adviser Awards 2019 in the Adviser Firm of the Year category.  

The Professional Adviser Awards, now in its 14th year, seek to reward excellence both within the financial advice profession and broader financial services sector. This nomination as one of the finalists is a real testament to all the hard work that AWM put in both collectively and individually every day.

The regional winners will be announced at a black-tie ceremony in February, next year. Later that evening the overall national winner will be picked from among the eight regional winners.

For the full details on the 2019 Professional Adviser Awards click below…

Share our good news

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Whatever your age…the importance of making an Annual Financial Plan​

Whatever your age...the importance of making an
Annual Financial Plan

Even if you feel fairly confident about the way you’ve been handling your finances so far, understanding how you can use an annual financial plan to your advantage can help you make smarter decisions with your money going forward.

Your starting point may differ depending on your age, income, debts and assets – however the most important components of an annual financial plan are the same. This is what you need consider when making your annual financial plan:

Life Events

Reaching certain milestones, such as getting married or having a baby, are obvious reasons to reshape your financial plan. For example, a twenty-something my want to focus on saving for a deposit on a first home, while a young family may want to look into the future to save up for their children’s schooling or university.

Retirement and Investing

Reaching certain milestones, such as getting married or having a baby, are obvious reasons to reshape your financial plan. For example, a twenty-something my want to focus on saving for a deposit on a first home, while a young family may want to look into the future to save up for their children’s schooling or university.

Actually, saving for retirement should be a top priority at any age; however, this gets pushed to the back burner far too often. By saving for your retirement in an ISA or a pension plan you can enjoy real tax advantages. If you’re not able to save in an employer-sponsored retirement account, a stocks and shares ISA is an option you can consider.

  • A general rule of thumb is a percentage of salary equal to half your current age if you want to have half your salary paid as a pension by your mid-60s. 
  • A 20-year-old needs to save 10% a year, whereas someone starting to save at 50 would need to put aside 25% of earnings on a regular basis.

Read those two lines again… A bit daunting given other demands on income.

Saving for emergencies

Again the general rule of thumb for an emergency plan is 3-6 months worth of expenses in that ‘rainy-day-fund’. If you don’t have an emergency savings buffer yet – or yours isn’t as big as you’d like it to be – then starting one or beefing it up are items you should add your financial to-do list moving forward.

Work on building Alternative Income Streams

Developing an additional income stream for retirement beyond tax-advantaged and taxable investment accounts is a must. Investing in a rental property and becoming a landlord can provide regular income if you’re concerned about not saving enough for your later years. Looking for ways now to maximize your income later is a must.

Saving Goals

Your annual plan should include your outlook on the future – What do you want to accomplish in the next 12 months? With regards to what you want to save and where you should be putting that money. By starting with the total amount and then breaking it down in a monthly or weekly basis can make achieving your goal easier.

In Conclusion

Creating an annual financial plan may be time-consuming and may require you to face up to some financial realities that you’ve been avoiding, but it is well worth it in the end. Once your plan is completed, you can begin taking specific steps to ensure that your financial house is in order and running smoothly.

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Here’s how you should invest at every age

Here’s how you should invest at every age

A number of studies have shown that people are not investing enough to retire comfortably. In a survey conducted by the Financial Conduct Authority it was found two-fifths of people have less than £5000 in their pension pot. This may mean that they will have to work longer than they initially planned in order to retire comfortably. It is especially the millennials that prove to be a bit gun-shy
when it comes to investing. This, however, comes as no surprise as they were rudely introduced to the world of investing during the 2008 financial crisis. The cohort theory compares them to individuals who came of age during the great depression. By starting to invest early you will accumulate more money and it will ensure that you retire on time. Meir Statman, a professor of finance and author of ‘Finance for Normal People’ said that taking a risk is not a luxury; it’s a necessity”. Once you’ve decided how much risk you can stomach, you need to start thinking about how to invest.

Best investment for your 30’s

If you’re in your 30’s, you have 30 years or more to profit from investments before you’re likely to retire. Temporary declines in stock prices won’t hurt you much as you will have years to regain your losses. You can now access your pensions at the age of 55, but it’s likely to go up by the time today’s 30 year-olds reach retirement age. With AWM, your money will be invested in a selection of funds, grouped together as a portfolio for diversification. These range from AWM 1, our lowest risk portfolio invested in cash, bonds and absolute return funds primarily to protect returns and collect a steady income and dividends, to AWM 5, our highest risk grouping mainly focused on equities from the UK to the US to some emerging markets. So no matter your risk appetite, there is an investment portfolio that will suit your fancy.

Best investment for your 40’s

If you’re late to the saving and investing party, now’s the time to consider some lifestyle trade-offs. Start by saving into your employer’s retirement plan if you haven’t already done so. If you’ve been investing in a Defined Contribution Scheme or any other pension scheme, it’s now time to review whether or not you will have enough saved by the time you reach retirement age. If it fits your risk appetite, try to allocate your assets more towards bonds and fixed investments now, than in your 30’s. Also ask your adviser about the Carry Forward legislation, you may be allowed to contribute more to your pension than the annual allowance.

Best investment for your 50’s


At this stage in life, you need to examine your future goals and explore your current and desired future lifestyle. Investigate your current income, projected income and tax situation. The result of your analysis will influence the best investments in your 50s. It’s now time to plan your additional Income Streams. We know it can be hard to navigate, speak to one of our advisers to help you.

Investment advice at any age

Once all your expenses are covered and you can afford to, try to contribute 10-15% of your salary, not just your employer’s contribution. This will help set you up for a secure financial future. If you want to contribute additional money for your retirement, you could consider contributing to an ISA. It’s a tax-free way to save or invest. With a cash or Stocks and Shares ISA, you can save up to £20,000 for the 2018/19 tax year. It has similar features to a savings account but the interest you earn is tax-free. Your Stocks and Shares ISA can contain a range of investments. Because they are held in an ISA any gains you make are tax-efficient. There are also further ranges of ISAs including IFISA, LISA with their own benefits. Ultimately, how you invest in each decade is dictated by the progress you’re making towards your financial goals. Every case is unique, so speak to your financial adviser and decide on a plan of action based on their advice.

Start investing as early as possible to secure your financial tomorrow.

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Two thirds of UK adults don’t have a will in place

Two thirds of UK adults don't have a will in place

Studies have shown that nearly two thirds of UK adults have not prepared a Will. Meaning possessions, money, property and even dependent children could be left with someone you have not chosen

Macmillan Cancer support, who conducted the study, has found that a shocking 42% of people over 55 don’t have a Will in place.

 

Furthermore, a poll suggested that 1.5 million British citizens may have unwittingly made their Will null and void by getting married as marriage automatically revokes a Will made prior to the nuptials.

One in ten people with Wills have acknowledged that they are planning to update their Wills to include children and grandchildren, but are yet to get round to it.

Several other possible errors were found to be common:

  • The Will still includes an ex-partner.
  • A new partner is not added to the Will.
  • Leaving in someone you “planned to remove”

Official guidance recommends that people review their Will every five years and after any major life changes, but a quarter of Wills have not been updated for at least five years.

Previous research from Macmillan found that people’s top reasons for not having a Will included them having “just never got round to it”, as well as the belief that they don’t have anything valuable to leave and that they don’t need to write one until they’re older.

This can be particularly important where:

  • you share a property with someone who is not your husband, wife or civil partner;
  • you wish to make provision for a dependant who is unable to care for themselves;
  • there are several family members who may make a claim on the Will, for example, a second wife or children from a first marriage;
  • your permanent home is not in the United Kingdom;
  • you are concerned about the possible impact of care fees;
  • Inheritance Tax could potentially be an issue for your estate;
  • you are a resident in the UK but there is overseas property involved; and
  • there is a business involved.

Make sure your Will is legally valid. Likewise check your parent's or partner's Wills are 100% up to date.
Ascot Estate Planning offers a FREE Will review to ensure your Will achieves everything you hope it does.

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When Trump Tweets, the world trades!

When trump tweets, the world trades!

The social-networking platform Twitter has revolutionised the way in which individuals interact with one another. Through the distribution of content via a 280-character micro-blog (known as a “tweet”), users can report news items, advertise their wares or simply poke fun at the controversial issue of the day. In the United States, Twitter has exploded in popularity among political figures. It has become a necessary part of public life, with the sitting president and nearly every member of Congress actively participating. Many attribute its ascent within the political arena to be a product of former President Barack Obama’s groundbreaking use during his administration.

Every time current US president, Donald Trump, tweets, it has an impact on the international market. An untimely tweet or offhand comment may have a large impact upon intraday volatilities facing futures, equities or Forex markets. As a general rule, financial markets are not receptive to surprises and uncertainty – however, Twitter has the ability to supply both, periodically spiking short-term volatilities facing a wide variety of openly traded financial instruments.

Trump’s impact on the market was on full display earlier this year when even powerhouse, Amazon’s shares went down by 5.1% at one point in time. It is because of the jaw-dropping speed at which certain stock moves in response to Trump’s tweets that some sophisticated traders are using an algorithm that instantly captures Trump’s Twitter remarks and then immediately buy or sell the affected stocks. Others have opted to ride it out as the trend seems to be that the market value amost always recovers – often within the trading day.

So the moral of this story is…Beware presidents bearing tweets

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Pension Planning – What are your options?

Pension Planning - What are your options?

Pension planning is one of the most important, but forgotten, areas of estate planning.

When someone thinks about planning for the future to ensure their assets pass to their loved ones, the first thing they consider is ensuring they have a Will in place which is up-to-date and meets their wishes.

However, pensions fall outside of your estate and therefore do not pass via your Will meaning this planning doesn’t provide any structure of your intent for who should receive your pension.

Often, people’s pensions make up a large part of their total estate, but they are left with no nomination form or trust planning, so the pension provider makes the decision at the time of death as to how it is paid out.

Do you really want them to make those important decisions for you? They may not know about your close relationship with your godchild, or the sibling that you don’t get on with and wouldn’t want to receive it.

Even if you do have a nomination form in place, from the moment your spouse, child or other loved one takes a lump sum, that full value sits inside their name at risk of the following threats

If your spouse takes a lump sum

Marriage After Death (MAD):

This risk can affect the family in many ways. For example, say you passed away your spouse was to re-marry soon after when grieving and then realise it wasn’t what they wanted. On divorce, half of the funds could be lost. Alternatively, it may be a situation where the survivor meets someone else some time later and remarries. There would still be the risk that upon second death, their estate would pass to the partner (as the funds are now in their estate, and marriage revokes previous Wills). On the new partner’s own death, it’s likely they would leave it to their own children and it may never reach your children.

Care Home Fees:

If your spouse took funds into their name, and then needed to go into care, the funds would be taken into consideration and assessed for care fees.

Inheritance Tax:

Although the funds are Inheritance Tax free on your own death, if your spouse took funds into their name, they could end up paying Inheritance Tax on the funds when they die.

If your children take a lump sum

Divorce:

If either of your children were to get a divorce further down the line, half or more of the funds you left them could be lost to the ex-partner.

Future:

We all hope our chosen beneficiaries will do the right things and are ready to receive funds but when there are large sums involved however, you may wish to stagger the age at which funds become available, rather than the full amount being available to them at 18.

Bankruptcy or Creditors:

Again, assets taken could be lost if your beneficiaries ever got into financial difficulties. Again not always a common thing but in a world where beneficiaries may run their own business etc. it’s a risk that can simply be protected by the use of the Trusts we will recommend.

Inheritance Tax:

Although the funds are Inheritance Tax free on your own death, again if your children took funds into their name, they could end up paying Inheritance Tax on the funds when they die.

Pension Planning is a very complicated area but certainly something that you need to ensure you have thought about.

Please contact us on 01344 851 250 or enquiries@ascotep.com if you would like to discuss this further, or click the button below.

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