Ellis Bates Financial Advisers
We outline the different options that are available at retirement including annuities, pension drawdown, uncrystallised funds pension lump sum and a mix and match approach.
We discuss The United Nations 17 Sustainable Development Goals and how we align our investment portfolios to one or more of these, whilst breaking these down into environmental issues, social issues and governance issues.
| 2021/22 Earnings p.w. |
Employee | 06.04.2022 – 05.07.2022 Earnings p.w. | Employee |
| Below £184 | Nil | Below £190 | Nil |
| £184 – £967 | 12% | £190 – £967 | 13.25% |
| Over £967 | 2% | Over £967 | 3.25% |
| 06.07.2022 – 05.04/2023 Earnings p.w. |
Employee | ||
| Below £242 | 0% | ||
| £242 – £967 | 13.25% | ||
| Over £967 | 3.25% | ||
| 2021/22 Earnings p.w. | Employer | 2022/23 Earnings p.w. | Employer |
| Below £170 | Nil | Below £175 | Nil |
| £170 – £967 (U21s/apprentice U25s/Veterans) | Nil | £175 – £967 (U21s/apprentice U25s/Veterans) | Nil |
| Over £170 (otherwise) | 13.8% | Over £175 (otherwise) | 15.05% |
Class 1A: Generally the employer rate on all benefits in kind is 13.8% for 2021/22 & 15.05% for 2022/23.
Employment Allowance reduces overall employer class 1 NICs by up to £4,000 for 2021/22 & £5,000 for 2022/23, subject to conditions.
| 2021/22 | 2022/23 | ||
| Class 3 | Flat rate = | £15.40 p.w. £800.80 p.a. |
£15.85 p.w. £824.20 p.a. |
| 2021/22 | 2022/23 | ||
| Class 2 | Flat rate =
If profits over |
£3.05 p.w.
£158.60 p.a.
£6,515 p.a. |
£3.15 p.w.
£163.80 p.a.
£11.908 p.a. |
| Class 4 | Rate =
On profits |
9%
£9,568 – £50,270 Over £50,270 2% |
10.25%
£11,908 – £50,270 Over £50,270 3.25% |
| Allowances | 2021/22 | 2022/23 | |
| Personal allowance (PA)* | £12,570 | £12,570 | |
| Married couple’s allowance (MCA) Ø | Spouse/civil partner born before 6.4.1935 | £9,125 | £9,415 |
| Minimum MCA | £3,530 | £3,640 | |
| Blind person’s allowance | £2,520 | £2,600 | |
| Marriage allowance** | £1,260 | £1,260 | |
| PA income limit | £100,000 | £100,000 | |
| MCA income limit | £30,400 | £31,400 | |
| Dividend allowance | £2,000 | £2,000 | |
| Personal savings allowance | Basic rate tax taxpayers | £1,000 | £1,000 |
| Higher rate taxpayers | £500 | £500 |
* PA reduces by £1 for every £2 adjusted net income exceeds PA income limit.
ø MCA relief at 10% if at least one spouse/civil partner born before 6.4.1935. Reduces by £1 for every £2 adjusted net income exceeds MCA income limit, but not below minimum.
** One spouse/civil partner can transfer up to 10% of their PA to the other, provided neither is liable to tax above the basic rate.
Worryingly, when over 50s were asked about financial advice they said:
However, after heading that they could add as much as £47,000 to their pension (over a decade) by taking professional financial advice, half of them say they would.
Source data: 1,034 UK adults over the age of 50 (retired and nonretired) interviewed between 31.01.2022-07.02.2022
[1] https://www.retirementlivingstandards.org.uk/news/retirement-living-standards-updated-to-reflect
[2] https://ilcuk.org.uk/financial-advice-provides-47k-wealth-uplift-in-decade/
[3] https://www.bbc.co.uk/news/business-42193251
Cash flow modelling allows us to bring your financial future to life together.
We can help to:
| Overall Limit | |
| ISA 2021/22* | £20,000 |
| ISA 2022/23* | £20,000 |
| Junior ISA/Child Trust Fund 2021/22 | £9,000 |
| Junior ISA/Child Trust Fund 2022/23 | £9,000 |
*Eligible savers can contribute up to £4,000 of the overall ISA limit to a Lifetime ISA.
Since 6.4.2015, the spouse/civil partner deceased ISA saver (who died on/after 3.12.2014) has an additional ISA allowance equal to the value of the deceased’s ISA(s) at the date of death.
This information is based on our understanding of the Chancellor’s 27th October 2021 Budget & 23rd March 2022 Spring Statement announcements, the Scottish Budget announcements from 9th December 2021, and the Wales Budget announcements from 20th December 2021
The main measures enabling people to retire early or think about retiring early
There is no fixed path to retirement or finite end point. Everyone has a different journey through life, with their own experiences along the way, and there is no need for it to become stressful.
It is important to have a plan in place to ensure the retirement that you want. There are several key questions to consider including:
Get in touch with us to discuss your retirement planning options.
Sixty the most popular age to retire earlyThere are many factors that can influence when someone decides to retire. For some, it may be based on health reasons, while others may want to take advantage of government benefits or simply enjoy a more relaxed lifestyle. However, one of the most common factors that determines when people choose to retire is their age.
So, what is the most popular age to retire early? Sixty is the most popular age to retire early, according to new research[1] which reveals the key steps people have taken to embrace early retirement and examines the costs and benefits of doing so.
One in four (25%) are planning to celebrate their 60th birthday by leaving work behind. With the State Pension age currently standing at 66, the findings show one in six (17%) people who have taken early retirement did so when they were 60, making it the most common age to make an early exit from working life.
This is also the most popular target age for people who intend to retire early in the years ahead, with one in four (25%) planning to celebrate their 60th birthday by leaving work behind. The desire to retire early is primarily driven by ‘wanting to enjoy more freedom while still being physically fit and well enough to enjoy it.’
Nearly one in three people (32%) who have retired early or plan to do so gave this reason for embracing a new lifestyle. Financial security is the second most common factor prompting people to embrace retirement. More than one in four (26%) early retirees say their decision was a result of ‘being in a financially stable position’ so they can afford not to work.
The influence of money matters is also visible in people’s choice of early retirement age. One in five (20%) people targeting early retirement have set their sights on 55 to make the transition from working life. This is likely to be influenced by their ability to access their pension savings from this age.
Other key factors encouraging people to seek early retirement include reassessing their priorities and what’s important to them in life (23%), wishing to spend more time with family (20%) or finding they are either ‘tired and bored’ of working (19%) or find it ‘too taxing and stressful’ (19%).
The research suggests the impacts of early retirement are wide-ranging and broadly positive in many areas of life. Most notably, more than two in three (68%) people who have retired early say their happiness improved as a result. In terms of the world around them, 44% of early retirees say their family relationships improved and 34% reported improvements in their friendships.
When it comes to their health and wellbeing, more than half report that early retirement has delivered a boost to their mental wellbeing (57%) and half (50%) say their physical wellbeing improved.
However, the Findings suggest these benefits come at a cost, with nearly half of early retirees finding their finances worsening as a result (47%).
Women are the most likely to have felt a negative financial impact from retiring early (50% vs. 44% of men). Across both genders, only 22% feel they have benefited financially from their decision to retire early.
Among those people who have retired early, one in three (32%) identify having a defined benefit (final salary) pension among the main measures that enabled them to take retirement into their own hands. This suggests the concept of early retirement may get harder for younger generations to achieve, with the majority of the private sector workforce now saving into defined contribution pension schemes.
However, the findings suggest that people can still take positive steps to make an early retirement possible. Paying off your mortgage (30%) is identified as the second most common stepping stone to retiring early, while almost three in ten early retirees (29%) say saving little and often was one of their main strategies.
Nearly one in five (19%) say they also saved extra whenever they received a pay rise or a bonus during their working life.
Among those who take early retirement, the research also reveals there is a small contingent who have returned to work (17%) or envisage themselves doing so in the future (15%). Over one in four (27%) cite the reason for returning to work is because they ‘wanted a new sense of purpose’, making this the most frequent driver, followed by ‘missing the company and social interactions with colleagues’ (26%). However, a similar number (24%) of early retirees find themselves heading back to work having experienced financial issues.
While happiness soars in retirement, many people find their finances take the strain when they retire early and money worries are one of the biggest factors resulting in people returning to work. If you aspire to retire early, it’s vital you plan your finances to be sustainable for the long-term.
The dream of an early retirement is very much alive and kicking, but there are many factors to consider along the way and the current uncertainty about the future does not make this an easy decision. For further information or to discuss your requirements, please contact us.
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.
The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future. You should seek advice to understand your options are retirement.
Source data: [1] https://www.aviva.com/newsroom/news-releases/2021/12/sixty-the-most-popular-age-to-retire-early/