Young workers are on track to breach the pension Lifetime Allowance, and it shows the power of compounding Lifestyle 12/08/2022 Young workers calculating how much they need to save for retirement can feel like they face an impossible challenge. Yet, research suggests that a significant proportion could be on track to exceed the Lifetime Allowance (LTA). The findings highlight how valuable saving early and the compounding effect of investments are. The LTA is the total amount you can tax-efficiently save into pensions during your lifetime. If you exceed this threshold, additional charges could apply when you start to make withdrawals. For the 2022/23 tax year, the Lifetime Allowance is £1,073,100. It will be frozen at this level until April 2026. For someone just entering the workforce and earning a relatively low wage, the chance of exceeding that threshold can seem far-fetched. The top 10% of earners aged 18–21 could exceed the Lifetime Allowance by 58 According to research from PensionBee, the top 10% of earners aged between 18 and 21 could exceed the current LTA by the time they reach 58 – around seven years before the typical retirement age.
Guide: Your complete guide to buy-to-let Guides 10/08/2022 Buy-to-let properties can provide an additional income stream and help you to support your goals. As a result, becoming a landlord is something you may have thought about. For example, you may want to purchase a buy-to-let property to diversify your assets or provide children with an inheritance. One of the most common reasons is to fund retirement. However, it’s also common to have concerns about buy-to-let. You may worry about understanding the regulations and tax requirements if you become a landlord. If you’re thinking about investing in a property, there are some important things to consider first. This guide explains some of the essential things you need to know, including: How a buy-to-let mortgage works What taxes you may need to consider as a landlord How to reduce tax liability What to consider when you’re choosing a buy-to-let property And more… Download your copy of ‘Your complete guide to buy-to-let’ to learn more.
Investment market update: June 2022 Lifestyle 19/07/2022 Rising inflation and concerns about recession risks continue to place pressure on households and affect economies around the world. The World Bank has slashed its 2022 global growth forecasts from 4.1% to 2.9%. The organisation also warned the global economy is at risk of experiencing stagflation, where economic growth is stagnant, but inflation is high. As an investor, you may be worried about the effect the current situation could have on your portfolio and long-term plans. Remember, short-term volatility is part of investing, and you should focus on investment performance over years rather than months. If you have any questions, please contact us. UK Once again, inflation reached another 40-year high in the 12 months to June. The rate of 9.4% is slightly higher than the 9.1% recorded the previous month. The conflict in Ukraine is significantly affecting both energy and food prices, which is likely to place pressure on household budgets.
Inflation: What happened the last time the cost of living was rising this rapidly? Lifestyle 18/07/2022 The cost of living is rising quicker than has been normal in the last few decades. Indeed, the last time inflation was this high was in the 1980s. So, what happened then compared to now? According to the Office for National Statistics (ONS), inflation in the 12 months to June 2022 was 9.4%. As a result, the cost of living is creeping up, from your household bills to days out. The Bank of England (BoE) expects inflation to reach 11% this year before it begins to fall. There are several key reasons why inflation is higher now. The effects of the pandemic and related lockdowns have caused the price of some items and raw materials to rise. The war in Ukraine has exacerbated this, most notably increasing energy and food prices. While ONS data shows that average wages are rising, they haven’t kept pace with inflation.
1 in 10 accessing their pension do so to pay off debt. Here’s what you need to consider Lifestyle 18/07/2022 While lifestyle expenses are the most popular reason for accessing a pension, a survey suggests that a significant number of people are doing so to pay off debt. If you’re considering this, it’s important you understand how you can access your pension and what the long-term effects could be. According to data from Royal London, more than 1 in 10 pension withdrawals were made to pay off debt. If you have some form of debt, whether a mortgage or credit card, and can access your pension, it may seem like a straightforward solution. However, it’s not always the best option and it could mean you can’t reach other retirement goals in future. You can access a 25% tax-free lump sum from your pension from age 55 It can be tempting to withdraw the available tax-free cash from your pension, even if you’re not retiring or don’t need it to support your living costs.
