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Young employees, mainly those aged 18-34, drive the increasing need for workplace health support. Research indicates that 78% of young workers find health cover crucial, and 64% consider it their most significant benefit, starkly contrasting with the 46% of those over 55 who feel the same[1].
Moreover, 71% of younger workers would hesitate to switch jobs if health coverage wasn’t provided, highlighting its importance in career decisions. Additionally, 66% of this demographic believe that having health benefits would reduce sick days by enabling quicker access to healthcare professionals, thus promoting a healthier, more resilient workforce.

Impact on employee wellbeing and productivity

Including comprehensive health benefits can significantly enhance employee wellbeing and overall productivity. By facilitating easier access to medical care, employees are less likely to experience prolonged periods of illness, allowing them to maintain consistent work attendance and performance.

This support is particularly crucial for younger employees who place high value on health benefits and are more likely to consider these benefits when evaluating job opportunities. Consequently, employers who invest in comprehensive health cover demonstrate their commitment to employee welfare and position themselves as attractive employers in the talent market.

Expectations and employer response

Employers are beginning to notice this shift in expectations. Three out of ten firms report that job candidates’ expectations for health cover are rising. When health cover is provided, employers observe a 37% increase in satisfaction and a 33% boost in productivity. The data clearly highlights the significant impact health benefits have on both employee morale and overall business efficiency.

Mental health a growing concern

Mental health has emerged as a crucial element of workplace wellbeing, particularly for younger workers. Research shows that 76% of younger employees believe that health insurance improves their productivity, and 71% have taken time off for mental health reasons, compared to just 32% of older workers. Alarmingly, 71% of younger UK workers reported experiencing anxiety in the previous year, compared to 32% of those over 55.

Addressing the mental health challenge

As a result, 33% of employers now see rising mental health days as a major challenge. Younger workers no longer view health benefits as a bonus; instead, they expect them as a standard part of their employment package. This shift in perception underscores the urgent need for comprehensive health benefits in the workplace.

The need for accessible health cover

The UK continues to grapple with a workforce sickness epidemic and long NHS waiting times. In this context, providing affordable and accessible health cover at work has never been more important. Employers who wish to attract and retain top talent, maintain a healthy workforce and enhance business productivity must recognise the importance of offering health cover.

Source data:
[1] Opinium research on behalf of Simplyhealth throughout May and June 2024. The first surveyed 500 HR decision makers across UK businesses, while the second surveyed 2,000 employees with a minimum of 100 respondents across business services, construction, manufacturing, professional education, hospitality and leisure, transport, retail, food and drink, and healthcare. 2.81 million not working due to long-term sickness in the UK in July 2024, according to ONS figures.

THIS ARTICLE DOES NOT CONSTITUTE TAX, LEGAL OR FINANCIAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.

Whether it’s the chance to pursue further education, embark on a completely new career path or even start your own business, redundancy can serve as a catalyst for meaningful change and growth. As you navigate this transition, your workplace pension is one of the most crucial aspects to consider. Understanding your pension options is key to making informed decisions that will impact your financial stability in the long term

What happens to your pension when you’re made redundant?

If you’ve been made redundant, the workplace pension you have been contributing to remains yours. You won’t lose it due to a change in your employment status. However, leaving a job or being made redundant doesn’t automatically grant access to your pension immediately.
The standard rules on how and when you can access your retirement savings still apply. This generally includes accessing your pension from age 55 (rising to 57 in 2028) and typically taking up to 25% of your pension pot as a tax-free lump sum.

The next steps depend on the type of pension plan you were paying into while employed. Two primary types of workplace pensions exist: defined contribution (DC) and defined benefit (DB) plans. If you’re unsure which type you have, you can ask your employer or check documents from your pension provider, such as your annual statement.

Defined Benefit (DB) pensions

If you hold a DB pension, typically found in the public sector, contributions will stop once you leave the job. The value of this pension pot is usually determined by the length of your employment and your salary.

Defined Contribution (DC) pensions

For those with a DC pension, the primary change is that your employer’s contributions will cease. Unlike a DB pension, you may be able to continue making personal contributions.

What can you do with your workplace pension?

Depending on your circumstances and the type of workplace pension you have, several options are available.

Continuing contributions

If you have a DC pension, you might be allowed to continue making contributions and benefit from any applicable government tax relief. The value of any tax relief will depend on your individual circumstances. Remember, you won’t receive further employer contributions after leaving your job.
All contributions, whether from personal, employer or third-party sources, count towards your annual allowance, which is £60,000 for the 2024/25 tax year.

Contributing your redundancy payment to your pension

You may be able to pay a portion of your redundancy payment into your workplace pension, typically applicable to DC pension schemes. This usually requires an agreement with your employer. Note that your redundancy payment might be subject to tax, with the first £30,000 usually being tax-free. Any portion paid into your pension will also count towards your annual allowance.

Transferring your pension

You might consider transferring your pension pot into another workplace or private pension, usually reserved for DC schemes. However, combining pension pots isn’t suitable for everyone, as you could lose features, protections or benefits. Always compare products before making a decision, as the value of your combined pension pot can fluctuate.

Withdrawing your money

Depending on your pension scheme’s rules, you can generally withdraw money from your pension pot if you’re aged 55 or over (rising to 57 in 2028). However, withdrawing from your pension requires several factors to be considered. If you stop working, this might affect your entitlement to the full State Pension if you haven’t accumulated enough qualifying years of National Insurance contributions. Also, taking a flexible income from a DC pension while continuing to work may reduce the amount you and your employer can contribute without facing tax charges due to the Money Purchase Annual Allowance (MPAA).

Leaving your pension as is

You can opt to leave your pension untouched until your retirement age, ensuring you keep your login details and personal information up-to-date. This helps you maintain track of your savings. Update your details by logging into your pension account or contacting your provider.

Take your next steps with confidence

The right option for you depends on various factors, including the type of workplace pension scheme you have. Pension schemes are legally required to provide specific information about your scheme. Understanding your options can give you a clearer idea of what will happen to your pension if you’re made redundant, allowing you to focus more on your future plans.

A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS THE PLAN HAS A PROTECTED PENSION AGE).

THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.

YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.

This study also highlighted that six million individuals with multiple pension pots may be at greater risk, as half of the respondents believe scams are becoming increasingly difficult to identify.

The complexity of managing several pension accounts can leave individuals more susceptible to fraudulent schemes, as it becomes challenging to keep track of all the details.

Scammers take advantage of this confusion, making it harder for people to discern legitimate communications from deceitful ones. This growing difficulty in identifying scams calls for heightened awareness and stronger protective measures to safeguard pension savings.

Rising threat of pension scams

However, the awareness of reporting a scam is worryingly low, with only 32% of people knowing the proper channels. However, this figure improves significantly to 55% among those who consult financial advisers. This discrepancy underscores the importance of professional financial advice in mitigating the risk of scams.

The research further uncovered a high prevalence of various consumer scams. A significant 42% of respondents reported phishing attempts, 36% encountered scams imitating reputable brands and 24% experienced refund scams.

Younger people at higher risk

Interestingly, younger individuals between the ages of 18 and 34 are more susceptible to scams than the general population. The study found that 13% of this age group had been targeted, in contrast to 7% of the wider public.

The evolving tactics of scammers make it increasingly challenging for consumers to avoid falling prey. With the growing number of people managing multiple pension pots, keeping track of their finances has become more difficult.

Protecting your pension

To safeguard against pension scams, hanging up on unsolicited cold calls is crucial. Recognising unexpected contact as a potential red flag can also help avoid hasty and ill-informed decisions. Additionally, verifying firms on the Financial Conduct Authority (FCA) registry provides an extra layer of security.

Remaining vigilant and informed is essential in this climate of sophisticated scams. Consumers must take proactive steps to protect their hard-earned savings.

Source data:
[1] LV= Wealth and Wellbeing Research Programme, quarterly survey of 4,000 UK adults 12/08/24.

A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS THE PLAN HAS A PROTECTED PENSION AGE).

THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.

YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.

Key financial safeguards

The evolving dynamics of family life are causing a paradigm shift in financial engagement. For instance, it’s becoming increasingly common for individuals to prioritise career advancement or personal freedom over settling down early. While this shift allows for greater personal and professional development, it also means that key financial safeguards such as life insurance and pension plans are often not put in place until much later in life, if at all. This lack of early financial planning leaves many without a safety net, as the research shows.
The delay in securing financial products that were once considered essential is not just a personal risk but a societal one, potentially leading to a generation ill-prepared for future financial challenges.

Delays in key life milestones

An estimated 6.5 million UK adults (12%) postpone important financial decisions until they marry, have children or buy a home. However, societal changes mean these milestones are increasingly delayed. The research identified that official records show that the average age for having a first child is now 32, the highest it has ever been. Similarly, the average age for first-time homebuyers has risen to 34, the highest in decades.
People in the UK are also marrying later in life. Women now typically get married at 33 and men at 35, up from averages of 29 and 32 in the year 2000. This trend poses potential risks to financial resilience.

Financial resilience at risk

Delaying key life milestones often means postponing serious financial planning. Two out of five UK adults who have not started a family (21%) cite this as a reason for delaying crucial financial decisions. This includes taking out protection insurance (22%), starting a pension (23%) and contributing to savings (18%).

A significant portion of the population is delaying these decisions until marriage (11%) or homeownership (17%). Consequently, financial engagement among UK adults is declining, with 35.7 million adults not regularly checking their finances.

Impact on financial wellbeing

The lack of engagement has serious ramifications. Without protection insurance, millions of families are left without a safety net. Recent data indicates that half of all critical illness claims occur before age 50, highlighting the importance of early financial planning. Additionally, delaying pension contributions is setting millions of young people toward a retirement shortfall of more than £25,000 annually by the 2060s[2].
People are now waiting until midlife to focus on their finances, with the average UK adult only engaging with their financial planning at age 48. This delay increases the risk of missing significant insurance, savings and investment opportunities.

The risks of waiting

Delaying financial engagement until traditional life milestones like marriage and parenthood can lead to missed opportunities. Five million childless households currently lack essential financial products, and this delay in financial planning is already being felt across the UK.
The reluctance to save contributes to 30% of UK adults having no savings or investments or less than £1,000 set aside for emergencies[3]. By starting financial planning earlier, individuals can build a stronger financial foundation and be better equipped to handle life’s uncertainties.

Source data:
[1] Mustard research consisting of a nationally representative survey of 2,000 UK adults conducted in January 2024.
[2] Analysis conducted by Legal & General based on Opinium Research conducted amongst 2,000 online interviews of people aged 22-32 in August 2023. Income based on Legal & General annuities.
[3] https://www.fca.org.uk/publication/financial-lives/financial-lives-survey-2022-key-findings.pdf

THIS ARTICLE DOES NOT CONSTITUTE TAX, LEGAL OR FINANCIAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.

Effective planning can significantly impact the financial wellbeing of your heirs, making it crucial to consider various strategies and tools available for safeguarding your estate.

One common question we receive from clients is whether to gift assets during their lifetime or wait until they have passed away. The answer is more complex and heavily depends on your personal and financial circumstances and objectives. Gifting can provide immediate support to family members and potentially reduce your estate’s size, lowering the IHT burden.

However, careful consideration must be given to the gifts’ timing, amount and recipients to ensure that they align with your long-term goals and comply with tax regulations. Understanding these nuances is essential in making informed decisions that will benefit you and your loved ones.

Understanding Inheritance Tax

When you pass away, IHT is potentially payable to HM Revenue & Customs (HMRC). The amount due depends on the estate’s value minus any debts and after all available thresholds have been used. These thresholds are the nil rate band (NRB) and the residence nil rate band (RNRB). At a high level, the NRB is £325,000, and the RNRB is £175,000, the latter of which is only available if you leave your home to a direct descendant. The standard rate of IHT due to HMRC on amounts over these thresholds is 40%. This reduces to 36% if at least 10% of your net estate is left to charity.

Why do we gift?

We gift for two common reasons: We want to help our family and loved ones now, when they need it, and whilst we can see them enjoy it, as opposed to when we have passed away. This is often called a ‘living inheritance’. Additionally, we may have a large estate and wish to reduce its value so that our beneficiaries pay less or no IHT when we pass away.

How much can you gift?

In short, you can gift away however much you want to whoever you like and whenever you like. If these gifts fall within the ‘annual gift allowances’ or are made from your regular surplus income, they automatically fall outside your estate for IHT tax purposes. Otherwise, you must survive seven years after making the gift before the gift is excluded from IHT tax calculations.

The impact of sequencing gifts

The sequencing of gifts can significantly impact the wealth you want to pass on. In addition to the seven-year rule, there is the less well-known 14-year rule. Giving a gift outright to an individual and/or Absolute/Bare Trust in excess of the annual allowances is known as making ‘Potentially Exempt Transfers’ or PETs.

Potentially Exempt Transfers and their uses

For example, a common reason for making a PET might be to help a child onto the property ladder. To ensure the gift is outside of your estate for IHT tax purposes, you need to survive seven years from when the gift is made. If the PET is more than the NRB (£325,000), there is gradual tapering on the excess once you have survived for over 3 years. The longer you survive after making the gift (between 3 and 7 years), the greater the tapering.

Chargeable Lifetime Transfers

Should you settle any money into a relevant property trust, such as a Discretionary Trust, these gifts are known as ‘Chargeable Lifetime Transfers’ or CLTs. An example of such a settlement might be grandparents wanting to pass money down to their grandchildren. A common reason for this may be that their children already have a large estate, so if they were to inherit any more, it would be unhelpful for their IHT position.

Complications in gift order

Complications may arise when an individual has passed away and has made both PETs and CLTs. This is because the order of these gifts can result in bringing 14 years’ worth of gifts into the IHT calculation. When considering which gifts are liable to IHT, the gifts are placed in the order they were made, starting with the oldest and moving towards the date of death.

HMRC rules on failed PETs

HMRC rules are such that any CLTs made in the seven years before any ‘failed PETs’ must also be brought into account. If an individual makes a PET and dies within 6 years and 11 months, the PET fails. From the ‘failed PET’ date, HMRC will look back a further seven years and include any CLTs in their calculation to determine the IHT due on the PET.

Annual Gifting Allowances

Under current legislation, everyone can gift away £3,000 per year. This is called your ‘annual exemption’. Any unused allowance can be carried forward to the following tax year; however, it cannot be carried over again. There is also a wedding allowance of varying amounts depending on the relation, which must be made before the wedding, and the wedding must happen: £5,000 to a child, £2,500 to a grandchild, £1,000 to a relative or friend. Wedding gifts can be combined in the same year with the annual exemption.

Small Gifts Allowance

You can also make gifts of up to £250 to as many different people as you like, as long as the person has received more than £250 from you that tax year.

THIS ARTICLE DOES NOT CONSTITUTE TAX, LEGAL, OR FINANCIAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.

THE FINANCIAL CONDUCT AUTHORITY DOESN’T REGULATE TRUST PLANNING AND MOST FORMS OF INHERITANCE TAX (IHT) PLANNING. SOME IHT PLANNING SOLUTIONS PUT YOUR MONEY AT RISK, AND YOU MAY GET BACK LESS THAN YOU INVESTED. IHT THRESHOLDS DEPEND ON INDIVIDUAL CIRCUMSTANCES AND THE LAW. TAX AND IHT RULES MAY CHANGE IN THE FUTURE.

Save for unforeseen emergencies

As a mother, you’ve probably realised that emergencies can strike when you least expect them to. While an emergency savings pot can’t prevent sick days, uniform mishaps or broken friendships, it can provide a useful financial buffer for more expensive emergencies, such as boiler or car breakdowns. Building up at least six months’ worth of essential expenditure in an easy-access savings account reduces the risk of falling into debt or dipping into savings allocated for long-term goals.

Protection, protection, protection

An income protection policy should be considered if your family relies on your income to cover bills, childcare, school fees or after-school activities. This type of insurance pays out a portion of your salary if you suffer from a long-term illness and cannot work, helping you maintain financial stability and ensuring your children’s lifestyle isn’t unduly affected.

Life insurance is another essential protection, offering a vital financial safety net should the worst happen to you. It provides a lump sum or regular income if you pass away during the policy term, which could help pay off the mortgage and ease the financial burden on your family.

Your pension matters

If you’ve taken time off work to care for your children, finding ways to top up your pension savings is crucial. Many mothers prioritise their children’s futures over their own, but neglecting your pension can have long-term financial repercussions that ultimately affect your entire family. The good news is that there’s still ample time to get your pension back on track.

If you qualify for the full amount of the new State Pension, you will receive £221.20 per week, or £11,502.40 a year (2024/25). You must have paid National Insurance (NI) contributions for 35 years to qualify for the maximum amount. If you’re not working, you’ll receive NI credits automatically as long as you claim Child Benefit, and your child is under 12. You may still receive these credits if you’ve claimed child benefits but opted out of payments to avoid the High-Income Child Benefit charge.

Topping up pensions

Consider topping up your workplace or private pensions. Pensions are a highly cost-effective way of saving for retirement due to the tax relief you receive on personal pension contributions. This means a £100 pension contribution will only cost you £80 if you’re a basic rate taxpayer, £60 if you’re a higher rate taxpayer or £55 if you’re an additional rate taxpayer, as long as the total gross contributions are matched by the income in that band.

Even if you aren’t working, you can contribute up to £2,880 per year into a pension and still receive 20% tax relief, boosting your contribution to £3,600. If you receive any cash gifts or inherit some money, saving it into a pension can significantly enhance your retirement funds.

Wealth creation for your children

If financially feasible, saving money for your children can profoundly impact their future, potentially helping with university fees or securing a deposit for their first home. To maximise the growth potential of their money, consider investing in the stock market.

Although mothers might naturally lean towards being risk-averse, history shows that, over long periods, the stock market generally outperforms cash. A Junior ISA is a starting point. It offers tax-efficient investment growth and locks away funds until your child’s 18th birthday.

Obtain professional financial advice

You might not have the time or inclination to sort out your finances independently – and that’s perfectly fine. Financial matters are one area where entrusting the responsibility to a professional can be done guilt-free.

Obtaining professional financial advice can instil confidence that you’ve made the right decisions with your money, allowing you to focus on yourself and your family.

A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS THE PLAN HAS A PROTECTED PENSION AGE).

THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.

YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.

This document clearly states your wishes, ensuring your assets are allocated precisely as you intend. Without a Will, you lose this control and are considered to have died ‘intestate’. Consequently, intestacy laws come into play, determining how your legacy is distributed. These rules are far from straightforward and vary significantly based on factors such as your location, relationship status and family structure.

The complexity of intestacy laws can lead to unintended consequences, such as estranged relatives inheriting your estate or loved ones being left without adequate support. The absence of a Will complicates the distribution process and can create emotional and financial strain for your family. By having a valid Will, you provide peace of mind, knowing that your wishes will be respected and potential disputes or challenges will be minimised.

Lasting Power of Attorney explained

Equally important in legacy planning is the concept of a Lasting Power of Attorney (LPA). This legal document permits you, the ‘donor’, to appoint one or more individuals, known as ‘attorneys’, to make decisions on your behalf or assist you in doing so. There are two primary types of LPA: Health and Welfare, and Property and Financial Affairs.

Importance of Health and Welfare LPA

The Health and Welfare LPA ensures that your chosen attorneys can make decisions regarding your medical care and life-sustaining treatment when you are incapacitated. This document becomes effective only when you lose mental capacity, allowing your attorneys to act in accordance with your expressed wishes.

Property and Financial Affairs LPA

On the other hand, the Property and Financial Affairs LPA allows your attorneys to manage your financial matters, including paying bills, managing your bank accounts and handling property transactions. This type of LPA can be activated as soon as it is registered, provided you grant permission or upon losing your mental capacity.

Avoiding potential financial pitfalls

From a financial planning perspective, neglecting to establish an LPA can lead to significant issues. Without an LPA, your loved ones may need to apply to the Court of Protection for the right to act on your behalf, a time-consuming and costly process. This can be particularly problematic if the finances are solely in the name of the incapacitated individual, leaving their spouse or partner without legal access to necessary funds.

Registering your LPA

Once drafted, LPAs must be registered with the Office of the Public Guardian (OPG). This registration is crucial for the documents to become legally effective and ensures that your chosen attorneys can act on your behalf when necessary.

Holistic financial planning

We can help you identify these potential pitfalls and plan accordingly. By incorporating LPAs into your financial strategy, you can avoid the complications that arise from an unexpected loss of capacity, ensuring that your financial matters are handled smoothly and in line with your wishes.

A dedicated savings pot can be the foundation for achieving your dreams, whether buying a home, embarking on a dream holiday or ensuring a comfortable retirement. Saving empowers you to take control of your finances, making future aspirations more attainable and less stressful.
However, to truly harness the power of saving, it is essential to set clear money goals and develop a plan to stay on track. Setting specific, realistic goals provides direction and motivation, turning abstract aspirations into achievable targets. This involves defining what you are saving for, how much you need to save and establishing a timeline to reach your objectives.

How to set your goals

First things first, think about what saving goals you’re aiming for. Here are a few considerations. Write down your goals. Physically writing out what you want to achieve can help you see the bigger picture of your aspirations and make it feel more real. Are you saving for your family, retirement, holidays, a house, an emergency fund or a car? Remember to keep in mind what brings you joy and purpose, too.

Make your goals specific and realistic

General statements like ‘I want to save more’ or ‘I need to spend less’ are too vague to stick to. They make it too easy to create many ‘exceptions’ that knock you off track. Setting specific goals could help you work towards achieving a clear, fixed target. For example, ‘I want to save £6,000 in the next six months’ or ‘I want to halve how much I spend on takeaways for the rest of the year.’ It’s also important to ensure your goals are realistic and achievable – setting goals that you’re unlikely to reach because they are too ambitious could be disheartening and demotivating.

Split your goals into short and long-term

A short-term saving goal could be building up a rainy-day fund to pay your bills if you lose your job. A longer-term goal may be saving up a deposit for a house or reviewing your monthly pension contributions, depending on when you want to retire. You don’t have to wait to complete your short-term goals before starting your longer-term ones. Think about how your goals would fit in with living a longer, multi-stage life.

Talking about long-term goals

As we start to live longer, saving for your later years might be something you want to give serious thought to. For example, are your retirement savings right for you, and what lifestyle do you have in mind after work? Or do you need to put some money aside for healthcare? The dynamics of how we live are changing, too. We’re moving away from the traditional three-stage ‘education, employment, retirement’ model to living more varied and flexible multi-stage lives. Our age no longer defines life’s stages but rather our decisions about how to spend our time. You might choose to attend university in your 40s or decide not to retire.

What to do if you have too many goals

Sometimes, setting too many goals can be overwhelming and hinder your progress. If you have a long list of goals and need help to meet them right now, you could add these to your long-term plan. You might decide to start saving for something in a few years rather than right now. It all depends on what’s most important to you and the money goals you’d like to achieve first.

How to meet your goals

So you’ve written down your money goals, but how do you achieve them? Begin with the end in mind. Planning is important to stay on track. Work back from there once you’ve chosen the financial goals you want to achieve. Decide where you want to be financially, set a future date and track back to where you are today. Setting milestones along the way might help, especially for those long-term goals.

Consider which goals you need to achieve first

You might have many money goals, but some need your attention first. It’s essential to recognise those and separate out what’s important from what’s urgent. Debts can often be a pressing money issue and are something to stay on top of. Understanding how much you need to save each month is crucial. As mentioned, you want to make sure your goals are achievable. So, think about when you want to achieve your goal and how much money you’ll need to save each month to meet it.

Choose where you’re going to save your money

It’s a good idea to consider where you’ll put your savings. There are a range of different savings accounts – so research which ones are best suited to your needs and goals. If you’re considering investing, bear in mind that the value of an investment can fall as well as rise and isn’t guaranteed. You could get back less than you invest. We can help you review your options.

Staying on track to achieve your goals

Now you’ve started saving towards your money goals, here are some things to consider to help you stay on track. Be proactive. Getting started is just the beginning; it’s important to stay on top of your goals and the milestones you’ve set. Not only will this help you achieve them, but it could also prevent bigger problems from building up. To help you stay on track, you could consider setting up a standing order so the money is automatically allocated to your savings pot. And if it helps, mark off a countdown on your calendar to keep you motivated as you get closer to your goal.

Review your goals

Things change, and so can your goals. As we start to live longer multi-stage lives, you might find that you need to adapt what you’re saving for or working towards due to a change in your circumstances. Like reviewing your budget, you might find checking in on your goals mid-way through the year useful.

Be cautious

Achieving your money goals can require patience. Being realistic about how long reaching each milestone might take is a crucial part of meeting your targets – and there are times when you might want to give up. Whatever your money goals, the first step is to start. Whether it’s starting small, make sure your targets are achievable based on how much you can afford each week or month.

These letters are being sent to women who have taken time off work to raise children since 1978, following the identification of underpayments in the Department for Work and Pensions (DWP) July 2022 annual report.

State Pension underpayments

Affected women may have been underpaid by tens of thousands of pounds over the course of their retirement due to not receiving National Insurance credits towards their State Pension entitlement. If you receive a letter from HMRC indicating that you may be one of those affected, it is crucial to check if you are owed a State Pension back payment.

HMRC estimates that affected women could be owed an average of £5,000 each. The letters will be sent out over the next 18 months, prioritising those over State Pension age. Additionally, you may be eligible for Home Responsibilities Protection.

Avoiding scams

If you are concerned about potential scammers exploiting this issue, you can verify the letter’s authenticity by contacting HMRC on 0300 200 3500. The issue was initially corrected in 2011, resulting in 36,000 women receiving a share of £83m. Nevertheless, the DWP report indicates that thousands more women may still miss out on their rightful State Pension entitlement.

Historical context

This is not the first instance of women’s pensions being underpaid. This latest issue follows a scandal involving the underpayment of State Pensions to married women and widows who claimed their pension before April 2016. Based on their husbands ‘ records, these women were entitled to higher rates, with the underpaid amount estimated to be around £1.5 billion.

Ongoing challenges

Many pensioners continue to be underpaid due to these errors, and sadly, tens of thousands have passed away without receiving any of the money they were owed. The DWP has pledged to track down and pay the owed amounts to those affected by the end of 2024.

Additionally, investments can provide a passive income stream, helping to fund major life events such as buying a home, funding education or enjoying a comfortable retirement. The power of compounding returns further amplifies the benefits of investing, as the earnings on your investments generate their earnings over time.

However, it is crucial to understand the concepts of risk tolerance and risk capacity to make informed investment decisions. Properly balancing your investment strategy with your risk profile can significantly impact your financial success and peace of mind, helping you navigate the complexities of the financial markets more effectively and confidently.

Understanding risk tolerance

Risk tolerance refers to an investor’s willingness and ability to endure market volatility and potential losses. It measures your comfort level with investing in assets that may fluctuate in value. Factors influencing risk tolerance include your personality, past investment experiences and financial goals.

For example, if you are comfortable taking risks, you might prefer investments offering higher potential returns, understanding that these come with greater volatility. Conversely, if you are risk-averse, you would likely choose safer investments, even if they offer lower returns.

Understanding your risk tolerance is crucial before you begin investing. Ask yourself questions like: How comfortable are you with market volatility? How might you react if your investments decrease in value? Are you someone who embraces investment risk for greater opportunities, or are you more risk-averse and likely to worry when the market dips?

Defining risk capacity

Unlike risk tolerance, risk capacity is not based on your emotional comfort with risk. Instead, it pertains to how much risk you can afford to take, given your financial situation, investment time horizon and life stage.

Risk capacity considers practical aspects like your income, savings, liabilities and the time frame for achieving your financial goals. For instance, a young professional with a steady income and decades before retirement may have a higher risk capacity than someone nearing retirement who cannot afford significant portfolio losses.

The importance of aligning investments

Aligning your investments with risk tolerance and capacity is critical for several reasons. First, it helps ensure that you do not take on more risk than you can handle emotionally or financially. Second, it prevents you from being overly conservative, which might hinder your ability to grow your wealth sufficiently to meet your financial goals.

Practical tips for assessing risk tolerance and capacity

Self-assessment: Reflect on your past reactions to financial losses. How did you feel and respond? Consider your long-term financial goals and how much volatility you will endure to achieve them.
Financial review: Evaluate your current financial situation, including your income, savings, debts and future financial needs. Determine how much loss you can afford without jeopardising your financial security.
Time horizon: Assess the time you have to invest. Longer time horizons generally allow for taking on more risk, as there is more time to recover from potential losses.
Risk tolerance questionnaire: We can help assess your risk tolerance and provide insights into your comfort level with different types of investments.

Choosing investments

Once you understand your risk tolerance and capacity, we can advise on the appropriate investments that align with these factors.

Here are some options:

For high-risk tolerance and capacity: Equities, growth stocks and exchange-traded funds (ETFs). These investments offer higher potential returns but come with increased volatility.

For moderate risk tolerance and capacity: Balanced portfolios with a mix of stocks and bonds can provide a good balance of growth and stability.
For low-risk tolerance and capacity: Conservative investments such as government bonds, blue-chip stocks and high-quality fixed-income securities. These options offer lower returns but are less volatile.

Aligning investments with risk tolerance and capacity

It’s essential to align your investments with both your risk tolerance and risk capacity. Failing to do so may result in taking on more risk than you can afford or being overly cautious, causing your savings to grow too slowly. Both scenarios could hinder your ability to reach your financial goals.
Understanding your unique approach to risk and how it impacts you is vital.

Additionally, aligning your investments with your risk tolerance and capacity is essential for achieving your financial goals while maintaining peace of mind. By assessing these factors and choosing appropriate investments, you can more effectively navigate the complexities of the financial markets.

THE VALUE OF YOUR INVESTMENTS CAN GO DOWN AS WELL AS UP, AND YOU MAY GET BACK LESS THAN YOU INVESTED.

THE TAX TREATMENT IS DEPENDENT ON INDIVIDUAL CIRCUMSTANCES AND MAY BE SUBJECT TO CHANGE IN FUTURE.