starting a pension
Rule one for starting a pension is: the earlier the better, but better late than never. An early start means more time for compound interest to work its magic – a small contribution when you are young can be worth much more than a large contribution years later.
Remember too that every pound you pay into a pension is boosted by tax relief at your marginal rate. If you are in employment then you should have access to a workplace pension, which all employers must now offer by law. However, if you are self-employed then you will have to set up a personal pension.
Everyone with a defined contribution (money purchase) pension now has full access to it from the age of 55. Up to 25 per cent of the pot can be withdrawn tax-free, with the remainder taxed at the individual’s marginal rate.
What you do with your pension savings is now up to you: the numerous options include investing for income, drawing out lump sums, purchasing an annuity, or any combination that suits your needs in retirement.
pension wise and seeking advice
To help you explore the various options open to you, the government has introduced Pension Wise. This is a free phone or face-to-face service offering guidance on what is available under pension freedom.
However, it cannot provide formal advice, or recommend which of the options are most suitable for your particular circumstances. For this you will need to consult a financial adviser.
Willow offers retirement planning advice to clients around Essex in Chelmsford, Billericay, Southend and the surrounding areas.
estate and trust planning
Most of us want to know that when we are no longer around, we will be able to take care of the people we love by passing on the wealth we have worked so hard to accumulate.
The last thing you want is for the taxman to take any more of your assets than necessary but in organising your affairs in the most tax-efficient way, you also need to make sure that you take good care of your own financial needs in retirement and old age.
That is why more and more people are turning to people like us for expert help with estate planning, including inheritance tax planning.
Estate planning includes drawing up a well-drafted, tax-efficient will and taking advice on opportunities to minimise inheritance tax, including lifetime gifts.
Other estate planning solutions include whole of life insurance policies, which can help to offset significant inheritance tax bills in the future. Trusts are another useful tool for protecting assets to be handed on to future generations in a tax- efficient way.
Whatever the size of your estate, we can advise on opportunities to help you pass on your assets more effectively. Willow Financial Planning can also act as your executor or as a trustee.
making a will
Making a will is one of the most important steps you should take, regardless of your age or financial circumstances.
A will gives you peace of mind that your property and personal effects will go to those people you choose. Without a will, the intestacy laws dictate who gets what and this can produce unintentional results. For example, a spouse does not necessarily inherit all the estate.
Making a will is not nearly as daunting as you may think and the service is not expensive. It can, in fact, help you to identify the true value of your estate.
With careful planning, you can use the terms of your will as a means of reducing potential inheritance tax and of giving your family greater benefit at their time of need.
You can use your will to appoint guardians for your children and set up trusts to safeguard the future of your children or grandchildren. This can also achieve a tax advantage.
In the UK average lifespans continue to grow longer and longer and the prospect of one day having to receive care, either at home or in a residential environment, is something that most people will have to consider.
While some individuals may receive an element of care from their local authority, due to the means-tested nature of the industry many will find themselves faced with the cost of having to pay out of their own savings for care.
At Willow Financial Planning, we can help you prepare for long-term care in a respectful and sympathetic manner.
By putting the right plan in place we can make sure the funds are available to cover care fees for the rest of your or your loved one’s life. We can also make sure that the estate is protected from the costs of care.
In order to meet these costs in the future many people are starting to plan early, but what is the best way to save? And how much will you need to put away?
residential care costs
For some moving out of their home and into new accommodation where they can have all their needs met by a dedicated team makes the most sense. According to the latest industry figures the average price of residential care is approximately:
- £28,500 per annum for a residential care home, or
- £37,500 per annum if additional nursing is required.
home care costs
For others they may decide that receiving care in their own home is more suitable for them.
On average this service can cost:
- £11,000 per annum if you receive 14 hours of care a week from a carer, or
- £30,000 per annum for receiving full-daytime care, or
- Up to £65,000 per annum for night and day care in your home.
These figures will change in the future and it is important to plan ahead. There are a number of sources that we can use to give you an idea of what the costs might be.
However, while this may be a useful guide, discussing your care plan with an Independent Financial Adviser (IFA) may give you the peace of mind you require.
Willow’s specialists provide helpful Retirement Planning advice
Contact a member of our friendly, knowledgeable team and we will be happy to answer your questions: 01702 667 315