May 15th, 2019 | Andrew Hagger | News

15 May 2019 The annual cost of being retired mounts up to £11,830 a year or nearly £230 a week, new analysis from the UK’s leading independent equity release adviser Key shows.

Costs mount up from spending on the basics such as food, clothes and utility bills while leaving some spare cash for eating out and entertainment, the analysis of the latest Government spending data shows.

The weekly bill of £227.50 per person needed to fund the basics amounts to 35% more than the full basic State Pension of £168.60 available for those who qualify, underlining the need for other sources of income in retirement.

The national average cost of retirement at £11,830 a year does not paint the full picture for the UK as a whole – the cost of retirement in the South East of England is nearly £4,000 a year more at £14,270 than in the West Midlands where the cost is £10,280.

Retired people in the South East, South West, London, East Anglia and the East Midlands all need to find more than the national average while the less expensive areas of the country include Wales, Northern Ireland and the North East of England.

Key’s analysis shows the two biggest weekly costs are utility bills – gas, electricity and water – and food with both accounting for 20% of spending. Both cost around £2,370 a year on average.

Transport, including the cost of running a car, eats up around 16% of bills while spending on entertainment costs around 23%.

The basic costs in retirement underlines the need to maximise income from all sources available including property. Key’s data shows retired homeowners using equity release plans take an average £76,500 in property wealth from their homes which is enough to fund six-and-a-half years of the basics without spending on anything else. The property wealth released would be enough to cover the shortfall between the State Pension and basic spending for nearly 25 years.

Will Hale, CEO at Key said: “With retirees needing 35% more than the full state pension provides, people need to think carefully about how they will bridge this gap.  Workplace and private pensions as well as savings and investments can help but for most people maintaining a decent standard of living in retirement means maximising all sources of income. Property is increasingly a major part of retirement planning with retired households literally sitting on more than £1 trillion of wealth.

“The money that older homeowners can access through equity release is substantial and is being used for a wide range of needs.  This includes helping other family members by gifting, boosting basic levels of retirement income and even paying for unexpected expenses or home maintenance. Good specialist advice is key to ensuring that older homeowners receive the most benefit from their property wealth and use it in the most appropriate way for them and their families.”

The table below shows how retired spending varies around the country:

May 14th, 2019 | Andrew Hagger | News

13 May 2019 Only one in three (34%) self-employed millennials, aged 23-38, currently have some form of pension saving, according to analysis from Fidelity International’s report ‘Generation Self-Employed’.

Being your own boss seems to be a compelling prospect for millennials in the workforce with three in ten (30%) saying they would like to work for themselves in the near future.

However, of those who are working for themselves, their finances do not seem to be in the strongest position as almost half (43%) of self-employed millennials do not feel they are saving enough for their future. Furthermore, one in four (26%) say they are struggling financially and another one quarter (24%) say they are not saving on a regular basis. Two thirds (66%) of self-employed millennials have no form of pension savings while three-quarters (74%) of self-employed millennials who are not saving for their future retirement say they simply cannot afford to.

Key reasons why self-employed millennials choose to work for themselves:

Fidelity International’s new report, Generation Self-Employed, explores how the self-employed are managing their personal finances and their attitudes towards saving and investing. It is clear to see the drive to earn a higher salary doesn’t equate with financial security. In fact, the report reveals 40% self-employed millennials have never heard of a Self-Invested Personal Pension (SIPP).

Emma-Lou Montgomery, associate director for Personal Investing at Fidelity International comments: “It is never too early to save for retirement, especially for the army of ambitious millennials who want to work for themselves. The beauty of youth – never more so than when it comes to saving and investing – is that time is firmly on your side. Every penny you put aside in your 20s (or younger) will grow into something worthwhile, thanks to the magical power of compounding. This is when the returns you make on your hard-earned cash start to generate their very own returns. All without you having to do anything more than stay invested.”

“Fidelity’s calculations show investing early while still in your 20s could leave you £60,000 better off in retirement and it shows just how crucial it is for investors to take advantage of compounding by beginning their investment journey earlier on in life.

Investing at the age of 28 vs 38

“If an investor starts investing at the age of 28, putting £2,000 in the stock market every year for 20 years, receiving an annual return of five per cent, at the age of 48, their investment is worth a little over £69,000. If they stopped contributing money at this point, this is when the magic of compounding is ignited. Their savings increase exponentially over the next few years thanks to interest, with the portfolio’s value climbing to £159,154 by the time they are ready to retire at 65.

“If on the other hand an investor waits until they turn 38 before starting to invest, their portfolio is also worth just over £69,000 by the time they stop investing, aged 58. However, the money is given less time to work, as they head towards retirement. By 65, their pot has grown to £97,706 – £61,448 less, despite both contributing the same amount of money for the same period of time.”

Emma-Lou Montgomery adds: “The example shows just how powerful compounding can be and how investing when you’re younger offers significant rewards. There is a perception that becoming an investor requires age and experience and it’s a myth. In fact, the lesson is this – the sooner you plant the seed of investment, the higher your investment tree should eventually grow.”

May 9th, 2019 | Andrew Hagger | News

08 May 2019 The majority of over-45s do not know how much inheritance they will pass onto their beneficiaries, according to Canada Life’s 2019 IHT Monitor.

Two thirds (63%) of over-45s have not told their beneficiaries how much inheritance they plan to leave them, highlighting the ongoing uncertainty regarding the amount of money needed to fund later life.

Despite this lack of clarity, over a third (35%) of those passing on an inheritance believes their beneficiaries will use at least part of it to fund their own retirement.

This suggests many are in the precarious position of failing to plan adequately for later life and are relying on an inheritance windfall, which may not necessarily be passed down, in order to enjoy a comfortable retirement.

Over-45s concerned they will use up all their assets in retirement

One of the biggest concerns for over-45s is that they will use up all their assets to fund their own retirement and leave nothing behind for their beneficiaries.

Two in five (39%) are worried about this scenario, while a similar proportion (40%) are concerned they will not have enough saved in their pension to cover their later life. Meanwhile, three in ten (30%) are worried about giving away funds to family members that they may need for their own retirement.

As a result, it seems the majority of over-45s have accepted their beneficiaries will receive less inheritance than they might hope for. Two thirds (63%) of over-45s plan to leave only what is left over to their beneficiaries, while 16% will leave nothing and spend everything to fund their own retirement.

Neil Jones, Wealth Management and Tax Specialist at Canada Life, commented: “There is a clear disconnect among over-45s between their desire to leave something behind to their beneficiaries and the need to fund their own retirement. It seems that many are losing the battle, acknowledging they don’t know how much they’ll be able to leave behind to the next generation.

“It appears that many people over the age of 45 may not have clarity on their finances – what they need for later life and what they can set aside for their children, grandchildren and loved ones. To rectify the situation and gain control of their finances, over-45s should visit a professional adviser.”

May 1st, 2019 | Andrew Hagger | News

01 May 2019 Though the winter months are falling far behind us and the warmer weather is now setting in, research from home and boiler cover company, Hometree, reveals that over a third of UK households – the equivalent of around 6.4 million homes – say they wouldn’t be able to cover the cost of a broken boiler, putting them at risk of having no hot water or heating in their homes. In addition, one in five (20%) admitted they had nothing set aside for when their boiler went wrong.

And yet, a worrying 72% said they had no cover or insurance to protect them in the event of a boiler emergency.

Considering the average cost of replacing a boiler is around £2,500, the usual amount that households that owned their boilers had set aside was £765. However, this figure dropped to just £444 for those aged under 35.

This revelation comes as Hometree moves into the boiler cover space with the launch of Hometree Care Packages.

The boiler, heating and home products will offer a service plan protection for homeowners and landlords, offering emergency boiler repairs, replacements and annual services for your boiler.  Promising to be the ‘cover that actually covers’, Hometree’s new service plan is the most comprehensive boiler, heating and home cover compared to its competitors.

Simon Phelan, CEO of Hometree, said: “For many, boilers are the last things people think about when it comes to their home – until something goes wrong.  Having a boiler breakdown, leaving a home suddenly with no heating or hot water can be stressful enough without having to think of the costly bill that comes with repairing or replacing it.  With over a third of us having concerns about being able to cover the cost of a broken boiler, we advise homeowners to check they have the right cover in place to protect them and offset any unexpected expenses from such a breakdown.

“For a long time, consumers have been fed up with the same problems with big, traditional home cover companies. Confusing products, complicated pricing, price hikes and poor service have left too many people feeling ripped off and let down.  It’s time this changed. We’re thrilled to offer a cover product that actually covers, providing an affordable and comprehensive plan to our customers that will mitigate stress from a broken boiler and help save homeowners thousands in the long run.”

April 30th, 2019 | Andrew Hagger | News

30 Apr 2019 Power of Attorneys allow people to appoint someone to make decisions on their behalf, should a time come when they lack the mental capacity to do so themselves. If the person has already lost mental capacity then the Court of Protection can appoint a deputy to make decisions on that person’s behalf.

Among adults who know of Power of Attorney, around three quarters (76%) are aware of a financial Power of Attorney. Yet only around half (48%) are aware of a welfare Power of Attorney, which covers things like end of life health care decisions. 

There is a clear gender divide amongst those who understand Power of Attorney with  a quarter (23%) of women saying they have discussed setting one up compared to just one in six men (17%). Men (18%) who haven’t discussed setting one up were also more likely than women (8%) to say that they did not think they would ever need to set one up.

The study also found there was a lack of discussion on the subject, with almost half (48%) of adults not thinking they are at an age when they need to think about it, despite three in 10 (34%) being over 55. One in five (19%) said the reason for not discussing it was because they did not want to think about being unable to manage their own affairs.

Mona Patel, consumer spokesperson for Royal London, said:

“It may be uncomfortable to think about not having the mental capacity to make decisions, but it is important to plan in case this happens. While official figures show nearly 800,000 registrations were submitted last year in England and Wales, it’s concerning that only a third of people who have heard of a Power of Attorney fully understood how it works.  Appointing a family member or trusted friend to make financial or welfare decisions on your behalf stops the responsibility falling to the state and loved ones then having to apply to the Court of Protection, which can be emotionally difficult, time consuming and expensive.” 

Royal London’s Power of Attorney guide explains how to set one up and goes through the key things people need to think about before deciding to act as an attorney.

April 30th, 2019 | Andrew Hagger | News

30 Apr 2019 Anders Nilsson, spokesperson for weflip, said: “This decision by Ofgem which comes into force tomorrow, will not only provide financial compensation if something goes wrong, but will help to restore confidence in the switching process and the energy market as a whole, after a rocky few months of supplier failures and erroneous switches.

 “The energy price cap has left many households with little alternative but to take matters into their own hands to save money, and while most switches go smoothly, it’s good to see that customers have been provided extra protection, and suppliers have an incentive to ensure more switches happen without a hitch. .

 “Ofgem’s  longer-term plan to introduce further compensation for delayed switches and late final bills, along with the tightening of the rules on new suppliers entering the market, is all reassuring.

“But it goes without saying that the long-term solution to energy price rise frustration is to subscribe to an auto-switching service like weflip that can track prices and switch you automatically to a better deal, whenever it is possible to save money.”

For more information on how to save on your energy bills for life, visit: https://www.weflip.com/.

April 26th, 2019 | Andrew Hagger | News

24 Apr 2019 Research from financial wellbeing experts Neyber found that one in five young people¹ in Britain admit that their finances are out of control.

It also uncovered that an alarming 70% of people under-34 need to regularly borrow, either to pay their monthly bills or deal with day-to-day living expenses, and that payday lenders are more commonly used by the young (8% of 18-24 year olds had used one, compared with no one over the age of 65).

What’s more, according to the Money Advice Service, 18% of young adults have borrowed money from a friend or a family member to pay for necessities like bills and 61% agreed that their life would improve if they could manage their money better.

Heidi Allan, head of employee wellbeing at Neyber, says: “Whether it’s job uncertainty and fluctuating wages as a result of zero hours contracts, university loans or increasing property rental costs, many young people are seeking out unnecessarily expensive loans and other forms of credit just to support day-to-day living. One of the many impacts is that they aren’t able to create savings – for a buffer when they need extra financial support or a deposit on their own home. Good financial wellbeing is far too remote for far too many young people today.

“Employers can help. Being paid for the first time is one of life’s many milestones and the beginning of a lifelong relationship with earning, saving and spending money. Getting that relationship right from the start is the basis for good financial wellbeing, and employers have a unique opportunity to help young employees when they first join the workforce.

April 17th, 2019 | Andrew Hagger | News

17 Apr 2019 Insurance customers are increasingly banking on credit to pay premiums with nearly one in three planning to use more credit this year, new research from Premium Credit, the UK’s leading premium finance company shows.

Its nationwide study found 31% of customers will borrow more in 2019 to fund insurance, with rising premiums the biggest reason for increased use of credit. Just 8% believe they will cut back on credit this year.

Around 41% of insurance customers say they are relying on credit more in response to price rises on motor, home, pet, travel and life insurance premiums while one in five (21%) say they need to borrow as their disposable income is being squeezed.

However, 22% say they are using borrowing to spread the cost because the low cost of borrowing makes paying for insurance more affordable.

The bills they face are substantial – more than two out of five (43%) will put more than £500 of insurance premiums on credit with 13% borrowing more than £1,000, the research found.

The most popular form of credit to spread the cost of insurance is credit cards which are being used by 60%. However, 39% plan to use premium finance and pay monthly for insurance rather than in one lump sum.

Worryingly 13% are borrowing from family and 12% are borrowing from friends, while 4% are using high-cost credit including payday loans to ensure they can afford cover.

Premium Credit is warning that using high cost methods of credit is potentially risky and urges customers to consider premium finance; a purpose-built product, which for a small charge enables people to spread the cost of your cover monthly instead of paying for it all in one go.

Adam Morghem, Sfrom Premium Credit said: “The rising cost of insurance is driving increased use of credit to enable people to ensure they can afford the cover they need.
“With nearly one in three customers planning to increase the amount of credit they use to pay for their insurance, we encourage borrowers to ask about the premium finance option, a solution designed for this exact need and means customers are not underinsured and taking unnecessary risks.

“However, it is worrying that customers may be choosing to underinsure or borrow from family or friends- and in some cases rely on high-cost credit including payday loans.”
Its study found drivers are most likely to spread the cost of insurance cover with 84% of motorists using credit as the table below shows.

TYPE OF INSURANCE
NUMBERS BUYING ON CREDIT
Motor
84%
Home
76%
Pet
62%
Travel
57%
Life
45%

Premium Credit is the market leader in the UK and Ireland and the only premium finance provider accredited by BIBA. For more information, please visit: www.premiumcredit.com

April 15th, 2019 | Andrew Hagger | News

15 Apr 2018 Wedding guests shell out over £300 for each wedding they attend, according to new research from home insurer Policy Expert which questioned over 6,000 people in the UK. Nearly half (49%) of people attended a wedding in 2018, meaning that Brits spent more than £8.2 billion¹ watching their friends, family and loved ones say ‘I do’.

The summer months prove to be a popular time of year to tie the knot and guests will be totting up a total spend of £327 on gifts, food and drinks, outfits, accommodation and travel. For those lucky enough to enjoy the pre-wedding parties and attend the hen or stag do, the total cost of the wedding increases to £576.

When it comes to picking the perfect gift for the happy couple, the research found 40% of people give cash, 27% stick to the pre-approved gift list and 19% opt to gift money towards the honeymoon. One in five (19%) give gift vouchers and 5% of wedding guests go for a personal touch with a handmade or quirky gift. Wedding goers spend an average of £59 purchasing gifts to celebrate the day but those in the wedding party would be willing to spend £150 to treat the lovebirds.

Adam Powell, COO at Policy Expert comments: “If you or a family member is set to walk down the aisle this summer it’s important to check that gifts received from generous guests, as well as wedding rings and other valuables, are covered in your home insurance policy. While it may not be at the top of the checklist it’s an important consideration. The average gift costs £60, so even a modest wedding could bestow you with hundreds if not thousands of pound worth of presents. Policy Expert offers an additional 10% contents cover the month either side of your wedding as standard, meaning you can cross the threshold on your return from honeymoon without any nasty surprises.”

April 12th, 2019 | Andrew Hagger | News

12 Apr 2019 New research from Direct Line Travel Insurance reveals British Passport holders have collectively lost 567 million days of valid travel since new rules came into effect that stop any remaining time on an old passport being carried over at renewal.  As a result of passport holders renewing before their passports ran out, often because countries demand six months validity to let someone into a country, the equivalent of 155,000 10-year passports have been wasted.

On average, passport holders have 159 days left on their travel document when they renew, or just over five months.  Analysing the money spent buying ‘valid travel time,’ reveals that collectively passport holders have wasted £13.3 million when renewing their documents in just six months. Prior to September 2018, any remaining months (up to nine) on an old passport would be automatically added to a new passport. Now, however, time left on an old passport will not be added to a new one.

Of those who haven’t renewed their passports in the last two years, 1.5 million (five per cent) have less than six months remaining. These people may be in for a nasty surprise if travelling to the Schengen area of Europe in the event of a no deal Brexit, as current travel advice suggests that Schengen countries will require a minimum of six months left on British passports from the date of arrival. This includes countries like France, Italy, Spain and Germany.

Tom Bishop, Head of Travel Insurance at Direct Line commented: “The changes to the time carried over onto new passports have taken many people by surprise.  In many cases a 10-year passport is only useful for nine and a half years as so many countries require six months validity to let someone in.  It is a difficult balancing act, passport holders won’t want to waste remaining time on an old passport by getting a new one too early, but in many cases, holidaymakers will need to ensure they have at least six months validity before travelling.”

27.4 million people (53 per cent of UK adults), are planning a trip to a country that would require more than six months remaining on a passport in the coming year, with over a third (36 per cent) planning to visit a Schengen EU country, where they would need six months passport validity in the event of a no deal Brexit.

Why six months passport validity matters

In the 12 months leading to October 2018 46.3 million trips⁴ abroad were made by Brits on holiday, of which 77 per cent (35.7 million) were to the Schengen area. Over the last five years, the number of trips made by Britons to the Schengen area on holiday has increased by 7.3 million, or 26 per cent, while there has been a 290,000 increase (six per cent) in trips made to other countries requiring a minimum of six months on a UK passport to enter.

Between October 2017 and October 2018, 5.1 million holidays were made by Brits to non-European countries requiring a minimum of six months on a UK passport to enter, with the USA (2.2 million), Turkey (one million), UAE (560,000), Thailand (305,000) and India (213,000) being the most popular destinations.

Under the new rules in event of a no deal Brexit, nine of the top 10 countries visited by Brits last year will require a minimum of six months validity on a passport.  The Republic of Ireland will be the only destination that does not require six months on British passports to allow entry.Table one: Passport validity for top 10 visited countries by British tourists

Source: Direct Line Travel Insurance, 2019

Bishop continued: “With the Brexit process and timeline continually changing, the best advice for anyone going on holiday this year is to make sure they have at least six months remaining on their passport. Even just popping over to France on the Eurostar could require six months validity in the event of a no deal Brexit so it’s better to be safe than sorry. It is always sensible to make sure a passport has enough time on it before even booking a holiday, just in case.

“With all the changes happening due to Brexit, it has never been more important to make sure you have a comprehensive travel insurance policy that covers you for any health-related concerns, as EHIC card will not be valid under a no-deal Brexit.”

For a full list of passport rules in relation to Brexit, visit the Government website https://www.gov.uk/guidance/passport-rules-for-travel-to-europe-after-brexit. 

Other travel changes in the event of a no deal Brexit include:

• At border control you may need to show a return or onward ticket, show you have enough money for your stay and/or use separate lanes from EU, EEA and Swiss citizens when queuing
• Your European Health Insurance Card which entitles you to state provided healthcare may not be valid so comprehensive travel insurance becomes even more important
• If you are taking your vehicle abroad, you will need a green card from your car insurance company, a GB sticker for your car and an International Driving Permit (IDP)
• If travelling with a pet, contact your vet at least four months beforehand as current EU pet passports will not be valid. A blood test will need to be carried out with results verified by an EU approved laboratory and owners must wait three months from the date of a successful blood sample taken before travelling