Benefits of Financial Planning Page

What is Financial Freedom?

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Professional financial advice matters by helping you make informed decisions about how to best allocate your resources.

Financial planning is a crucial step towards achieving financial freedom and security. By taking the time to thoroughly evaluate your needs and personal goals, you’ll be able to make informed decisions about how to best allocate your resources.

With a comprehensive professional financial plan in hand, you’ll have the confidence and peace of mind to pursue your short-term goals and work towards your long-term future. With professional guidance, you’ll be inspired to realise that you have far more resources at your disposal than you ever imagined.

Early retirement

According to a recent study, UK consumers who receive professional financial advice can expect to retire on average three years earlier than those who do not seek professional advice, with advised consumers planning for retirement at age 66 as opposed to non-advised consumers who expect to retire at 69[1].

This underlines the positive impact that professional financial advice can have on retirement preparations, with those who seek advice feeling better equipped for their later years. The study identified that twice as many people who seek financial advice create a detailed spending plan in retirement compared to those who don’t take advice, with 45% of advised people falling under this category as opposed to 18% of non-advised consumers.

Enjoying retirement

Financially advised consumers expect to fund their retirement for a longer period, with an average of 23 years, compared to 17 years for non-advised people before pertinent cutbacks must be made. In addition, the study reveals that financial planning tends to be beneficial for people already in retirement.

Almost all (96%) of wealthy retirees who did a great deal of financial planning or just planned their finances slightly say they’re enjoying their retirement, dropping to 72% among those who have done no financial planning.

How much do I need to retire

Regrets for non-advised retirees are more pronounced, with the majority stating that they require more money in retirement compared to their original estimates, and that they wished they had planned more thoroughly, compared to advised people.

Despite having a higher household income, 23% of wealthier pensioners, with an income of between £40,000 and £49,999, wished they had planned more thoroughly, indicating that the value of advice remains consistent regardless of income.

Retirement Planning Services

Planning for retirement can be overwhelming, leading to several considerations, making financial advice crucial for people to feel more confident and prepared about their future. The research results underscore the significant variation between the retirement plans and experiences of those who have taken advantage of financial advice and those who haven’t.

The research findings demonstrate the value of professional financial advice in terms of the retirement age and the enjoyment of one’s retired life. Start planning today, and take the first step towards a brighter tomorrow.

Financial Planning Services

Financial planning can certainly feel complicated at first glance, but with the right guidance, it can be a smooth and stress-free process. At every step of your financial planning journey, we’re dedicated to providing you with accessible financial advice to support you in making informed decisions about your finances.

Cash Flow Forecasting

Our Financial Advisers use sophisticated cash flow forecasting software which helps you to visualise your expenditure, income and preferred lifestyle. It also allows us to simulate different scenarios and stress test how much financial resilience you may have to factors outside of your control, such as life events, economic changes and volatile markets.

If you have any concerns about your financial future or would like to find out more, please contact us.

Source data: [1] Boxclever conducted research for Standard Life among 6,000 UK adults. Fieldwork was conducted between 6 Sept–16 October 2022. Data was weighted post-fieldwork to ensure the data remained nationally representative on key demographics. Comparisons to data from last year are taken from Boxclever research among 4,896 UK adults conducted between 16-23 July 2021.

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Benefits of a cash flow forecast

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The benefits of cash flow modelling are forecasting your future finances. Cash flow modelling is a way of planning and analysing your financial goals and sits central to the financial planning and estate planning process and is a powerful tool to help bring your retirement planning goals to life.

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State Pension boost to deadline extended to April 2025

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Check you are entitled to full State Pension, deadline extended for topping any missing National Insurance Contributions.

The deadline to top up missing national insurance years between 2006 and 2016 has been extended to 5th April 2025, with the price of doing so remaining frozen at current costs during this period. This means that you will have more time to check your record and see if you can increase your State Pension when its time to claim.

Thanks to ‘transitional arrangements’ brought in when the new state pension system started in 2016, you have the opportunity to check your NI forecast and make any adjustments necessary.

Why NI years are important in calculating the amount of State Pension you will receive

The maximum amount of full State Pension you can receive as of April 2023 is £203.85 a week, but how much you will get depends on how many ‘qualifying’ NI years you have.

Many will likely need 35-40 qualifying NI years, and the ‘transitional arrangements’ mean you can pay extra contributions to plug any gaps in your NI record dating back to 2006.

If you are male and born after 5 April 1951 and female and born after 5 April 1953 you have until 5 April 2025 to buy additional contributions, after which you can only fill gaps going back six tax years.

If you were born before these dates, you have up to 6 years after you reach State Pension age to top up contributions and to increase your State Pension.

Step 1

If you have not yet reached state pension age, go to the State Pension Forecast Calculator to check out your NI payments record https://www.gov.uk/check-state-pension

Step 2

Consider buying extra contributions for any gaps showing on your record.

The standard cost of buying ‘Class 3’ National Insurance contributions is £15.85 for a week of missing contributions in the 2022-23 tax year. It would cost you £824.20 for an entire year.

If you are looking to fill gaps that occurred in the past two tax years, you would pay the rate from those years. Voluntary contributions for gaps in 2021-22 cost £15.40 per week, for gaps in 2020-21, the cost is £15.30 per week.

For those able to fill gaps between 2006 and 2016 (men born after 5 April 1951 and women born after 5 April 1953), the cost for a week is £15.40.

Step 3

Who should buy additional contributions?

If you are close to State Pension age and do not have enough qualifying years to get the full State Pension

If you know you are going to ‘run out of time’ during the remainder of your working life to be able to secure the necessary number of qualifying years to receive the full State Pension

If you are self-employed and don’t have to pay Class 2 contributions because you have low profits or live outside the UK, but you want to qualify

It is always important to seek qualified, independent financial advice when planning for your retirement or when trying to calculate your retirement income.

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Financial advice for retirement

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Regional Manager and Financial Planner, Dax Bayley, outlines how financial advice can benefit you in your retirement planning.

We will work together to create a holistic, comprehensive financial plan to achieve your goals.

Start your retirement planning journey

To find out more about how Ellis Bates Financial Advisers can help you answer questions such as ‘how much do I need to retire?’ or ‘what are my retirement options?’, then please get in touch.

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6 benefits of a property protection trust

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There are several benefits to putting a Property Protection Trust in place. It allows you and your partner to own 50% of your property each, so when one of you passes their share can be passed to their chosen beneficiary, whilst protecting the surviving partner’s lifetime interest in the property.

If you would like to find out more about our inheritance tax planning services, then please get in touch.

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Is your money working hard for you?

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Are you feeling uncertain on the way forward to your retirement?

We offer a range of retirement planning services, including a handy retirement calculator to see how much you need to save for retirement. Alternatively, find out more about how our cashflow modelling service can help you visualise your expenditure, income and preferred lifestyle in retirement.

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Top Financial Tips

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In these uncertain times, it’s more important than ever to make sure your finances are in order. We have 10 practical steps to ensure your money is working hard for you.

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Recession-proof your Finances

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10 practical steps to ensure your money is working hard for you

In these uncertain times, it’s more important than ever to make sure your finances are in order. The Bank of England believes that a painful squeeze on our living standards, driven primarily by soaring energy prices, is set to intensify and will push the UK economy into recession later this year.[1]

Making your finances recession-proof is all about taking practical steps to ensure your money is working hard for you. It is vital to be completely honest with yourself about your financial situation.

By conducting a thorough audit of your finances and gaining a comprehensive understanding of all your incomes and outgoings, this will show you exactly where your cash is going and, most importantly, help you identify problematic spending behaviour.

Here are 10 tops to help you recession proof your finances:

1. Make a budget and stick to it

This will help you keep track of your spending and ensure that you’re not overspending.

2. Save, save, save!

Try to put away as much money as you can into a savings account so that you have a cushion in case of tough times.

3. Invest in yourself

Take the time to learn new skills or improve upon existing ones. This will make you more valuable in the job market if you need to make a job or career change.

4. Remove any unnecessary payments

Look at your bank account and remove any pain-free direct debits. Consider if you’re currently paying for things you don’t really need, for example, subscriptions.

5. Time to switch

Look at energy tariffs, home insurance, car insurance, broadband, TV package, mobile tariff – now might be a good time to switch.

6. Stay disciplined with your debt

Make sure you’re making all of your payments on time and in full. This will help you avoid costly late fees and keep your credit in good shape.

7. Pay off high interest

Prioritise any high-interest debt, such as credit card debt, freeing up more money in your budget to cover other expenses if your income decreases.

8. Have an emergency fund

This is a must in case you lose your job or have any unexpected expenses. Try to save up at least between three to six months’ worth of living expenses so that your expenditure is covered.

9. Diversify your income

Don’t put all your eggs in one basket. Having multiple streams of income can really help. If one income source starts to dwindle – or gets eliminated completely – this will provide other sources to fall back on.

10. Diversify your investments

In addition to diversifying your income, it’s also important to diversify your investments. Review your investment portfolio and make sure your investments are spread across different industries and even different types of asset classes.

Secure your financial future

Following these tips will help you secure your financial future and protect yourself from the effects of rising inflation and the cost of living crisis. If you would like to find out more or to discuss your situation, please contact us.

Source data: [1] https://www.bankofengland.co.uk/monetarypolicy-report/2022/may-2022

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Millions of married couples have no idea about their spouse’s pensions & retirement plans

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Millions of married couples have no idea about their spouse’s pensions and retirement plans, according to new research

78% of non-retired married people do not know what their spouse’s pensions are worth.

47% of non-retired married people have not spoken to their spouse about their retirement plans

85% of non-retired married people are not aware of the tax-efficiencies of planning retirement together

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Pensions & Retirement Still Remain a Taboo

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When it comes to marriage and money, it’s good to talk!

Millions of married couples have no idea about their spouse’s pensions and retirement plans, according to new research[1]. More than threequarters (78%) of non-retired married[2] people do not know what their spouse’s pensions are worth.

Nearly half (47%) of non-retired married people have not spoken to their spouse about their retirement plans and 85% of non-retired married people are not aware of the tax-efficiencies of planning retirement together.

Retirement finances

Wealthy people aren’t doing much better. Mass affluent people (those with assets of between £100,000 and £500,000 excluding property) are more likely than average to be aware of the value of their spouse’s pension, but the majority (60%) aren’t going to plan their retirement finances with their spouse and 78% aren’t aware of the benefits of planning retirement together.

The research indicates that millions of married people are not talking to their partners about their pensions and retirement plans. That’s a mistake because couples who jointly plan their retirement can be much better off when they stop working.

Lifetime of saving

Most people have a good idea of what their house is worth, and the same attitude should apply to their retirement funds. After a lifetime of saving, the value of a retirement fund can be worth as much as a property so it’s important that people know how much their retirement savings are worth and the potential death benefits they offer.

The best way for people to ensure they have the retirement they want, their pension income lasts throughout their retirement and that they avoid unnecessary tax bills is to obtain professional financial advice. This is especially true for people who plan to retire within the next five years.

Pension tips for couples

  • Pay into your partner’s pension: A higher-earning partner approaching the Lifetime Allowance or Annual Allowance could pay additional contributions into their partner’s pension. The contributions will attract tax relief.
  • Don’t forget the death benefits and Inheritance Tax benefits of pensions: Pensions won’t normally form part of the estate for Inheritance Tax purposes and, on death before age 75, they can usually be paid out tax free (on death after 75, they are taxed as the beneficiary’s income). It can make sense to discuss when and how to access a pension and if it would be better to spend any other savings first.
  • Avoid unnecessary large withdrawals from a pension fund: Couples should consider how much money they need to withdraw from their pension funds. Drawing too much too quickly can lead to large tax bills.
  • Make sure your partner knows who to contact about your pensions if you die: You may have carefully arranged all your finances so that they can be passed to your loved ones in the most tax-efficient way possible. However, if your partner hasn’t been part of the conversation they may make uninformed decisions. It’s worth remembering that any adviser/client relationship you have ends on death. Data protection rules mean your financial adviser won’t necessarily know what is happening. This can lead to irreversible and costly mistakes being made.

On retirement, many people’s first instinct is to request their full tax-free cash entitlement. However, unless a large lump sum is needed
for a specific purpose, this is not always the wisest course of action. If flexibly accessing a pension, it can often make sense for couples to retain most of the tax-free cash entitlement until a later date, looking to utilise the personal allowance (and potentially the basic rate tax band) to draw tax-efficient income instead.

Successfully managing finances in marriage

When you and your spouse married, you agreed to share a financial future. It’s an important issue for most married couples. Although successfully managing finances in marriage is essential to your happiness together, talking about money may not come naturally. To discuss how we could help you plan your finances, please contact us for more information.

Source data: [1] LV= surveyed 4,000+ nationally representative UK adults via an online omnibus conducted by Opinium in June 2021. [2] Includes couples in civil partnerships. UK population stats from ONS. Total UK adult population is 52.7m UK adults (aged 18+).

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