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What about your Digital Legacy?

Archive for August, 2015

What about your Digital Legacy?

Tuesday, August 18th, 2015

The world’s most popular social network has begun allowing its members to designate someone, referred to as a ‘legacy contact’ to manage parts of the account on a members death. This feature was rolled out in the United States in February of this year. And, it is now possible for Facebook users in the UK to appoint a post mortem representative who will be able to decide what will happen to their profile after their death.

The so-called ‘legacy contact’ feature allows the appointed representative to write a final post and update photos, as well as be able to download the deceased’s public profile as an archive. However, the representative will not be given access to private messages and will not be able to edit what the deceased has already posted. In addition they will not be able to delete the whole account. By placing such restrictions on the representative, Facebook is aiming to respect the wishes of the deceased while being sensitive to their family and friends.

To select your ‘legacy contact’ – go to Settings > choose Security > then Legacy Contact at the bottom of the page. There you can designate an existing Facebook friend which will grant that person permission to download an archive of your data, or choose to have your account deleted after death. On making this selection the appointed representative will be sent an email notifying them of your choice. So, either they will accept the appointment or they can tell you that they don’t wish to act giving you the option to select someone else. It is important to note that only one person can be chosen although, it is possible to amend your choice at any time.

Should you not wish to appoint a ‘legacy contact’ it is also possible to instruct Facebook to permanently delete the account on death. In cases where a digital heir is appointed in the will, Facebook will designate that person. If no action is taken, Facebook will simply freeze the account and leave posts and pictures at the privacy settings you determined – a process it calls memorialization.

Making plans for a digital afterlife may seem morbid but with technology evolving in the way it has over recent years, considering what should happen to your digital media is growing in importance especially as it gives family members the ability to retrieve sentimental material which could otherwise be lost.

Understanding new Annuity products

Thursday, August 13th, 2015

Retirement Advantage is warning that more work is needed to ensure people understand the benefits of the new annuity products available following the introduction of the pension freedoms in April.

Its new research, conducted by YouGov in May 2015, surveying more than 1000 over 50s, found that while more than half (51%) of the over 50s say they understand annuities and how they work, just one in ten (11%) agree that an annuity would allow them to pass on what they need to relatives and only 15% agree that with an annuity they would get back the money they put in.

Andrew Tully, Pensions Technical Director at Retirement Advantage, said:

‘‘The new rules allowed us to fix the old concerns with annuities. Annuities can now provide a ‘money-back’ option through longer guarantees or returning any remaining money on death as a lump sum. However, although it’s early days, this message does not seem to be getting through.

We know that certainty is people’s top concern for retirement income, and these new annuities can give families peace of mind that the money invested in providing a secure income won’t be lost. There is a real risk that people will not get professional financial advice at retirement and therefore make bad decisions based on incomplete knowledge and incorrect beliefs. Making the right choices at retirement is a complex process and a professional financial adviser will be able to help ensure people understand the details and nuances of all the options available.’’


Money is more worrying than Health to over-50s

Wednesday, August 12th, 2015

Concerns over money dominate the thinking of pre-retirees, according to new research from Retirement Advantage. Conducted by YouGov in May 2015 with over one thousand survey respondents aged over 50 and not in retirement, the study finds almost half (49%) of the over 50s are worried about not having enough money in retirement to do the things they want to do, compared to just over a third (37%) who are concerned about health problems.

Financial worries dominate responses, with just under a third (31%) of the over 50s saying they are concerned about the cost of living in retirement, with the same proportion of people saying they are worried about not having saved enough for a comfortable income in retirement. Andrew Tully, Pensions Technical Director at Retirement Advantage, said:

”Our findings are stark. Money troubles are what soon-to-be retirees fear most. When they should be planning for a long and enjoyable retirement, the over 50s are instead fretting that they won’t be able to pay the bills. One of the first things people should do is shop around the market for the right annuity, drawdown plan or a blend of the two. Early signs indicate that since the pension freedom changes were introduced in April, less people are actually shopping around for their retirement income. This is not good news and if people aren’t shopping around then it is quite possible they may well be receiving poor value from the products they buy.’’

Asked about what was important when thinking about retirement finances, seven in ten (70%) of the over 50s said the ability to pay their bills, with more than half (56%) saying the ability to go on holiday was important to them.

Andrew Tully added:

“It is hoped the changes in pensions will increase the amount people are saving for retirement. It’s too early to see the impact of that yet, but helping people to understand how their savings and assets can translate into income in retirement is a big part of effective financial planning. Given the concern people show over paying for life’s essentials, it’s vital they speak to a professional financial adviser to understand how to get the best deals and maximise the income they get from their pension savings.”

Sources: (Published article: 2015/07/20)

The value of your investment can go down as well as up and you may not get back the full amount you invested. The value of tax reliefs depends on your individual circumstances. Tax laws can change.

Personal savings shortfall?

Wednesday, August 12th, 2015

The State Pension may not be enough to cover it!

The typical working over-45 year old faces a £8,955 annual retirement income shortfall based on their current savings and investments – meaning they will rely heavily on a state pension that will still leave them short, the latest Aviva Real Retirement Report shows.

The report reveals that over-45s, who are not yet retired, typically expect to need an annual income of £12,590 from their savings and investments when they retire. But Aviva’s analysis shows their typical current savings and investments only amount to £53,793, which would deliver income of £3,117 a year if an annuity is bought or £3,635 each year if invested in a drawdown plan over 25 years. This means the typical person only has enough private savings to finance 29% of their target income: leaving them with a potentially crippling £8,955 retirement income gap every year before the state pension is taken into account. Today’s average state pension income of £6,656 would bring their annual shortfall down to £2,299 in retirement. It means that the typical person is relying on the state pension to fund more than half (53%) of their expected retirement income. Despite the shortfall, 43% of working over-45s feel they are financially “fit to retire”.

Aviva’s findings are especially concerning for those over-45s who are closer to retirement and have less of a window to grow their savings. Worryingly, 29% have not even thought about how much retirement income they will need. Those aged 55-64 are more likely to have neglected the issue (34%) than 45-54s (21%) – despite having less time to act. However, Aviva’s analysis offers hope to over-45s by showing how a modest boost to savings habit can help them build an extra pot of £42,000: an amount which, in today’s money, would bridge the remaining £2,299 retirement income gap once the state pension is added to their existing funds.

With auto-enrolment only just reaching smaller companies, two in five over-45s have a company pension (43%). Fewer still have a personal pension or SIPP (30%); far below the 82% with current accounts and 70% with savings accounts. Having savings accounts, ISAs and company pension savings are key indicators of feeling confident about retirement finances. ISAs contribute 11p for every £1 saved by over-45s, but again less than half (46%) use this method of saving. Buy-to-let (BTL) property contributes 19p in every £1 overall: almost as much as ISAs, savings accounts and current accounts combined (20p). But this is an expensive venture: among those who have a BTL property, the typical investment is £126,440.

Clive Bolton, Managing Director of Retirement Solutions, Aviva UK Life, said:

“These findings should encourage every person still in work to think hard about their retirement finances and which group they fall into: the reasonably fit to retire, the potentially fit to retire or the currently unfit to retire. The pension freedoms have broadened people’s financial options in later life – but they don’t guarantee freedom from responsibility when it comes to better planning and improving savings habits.

As things stand, the vast majority of people are in danger of being left short-changed by insufficient savings pots, but with the addition of the state pension, the gap is narrow enough to enable them to take action to close it completely.

Finding additional ways to supplement their savings, such as increasing pension contributions while they are in work, working for longer or taking on a part-time job in retirement, may be enough to help them reach their target income.”

Tackling the retirement income shortfall – what should consumers consider?

  1. Understand what your total savings pot will provide as retirement income and how this measures up to your expectations.
  2. Consider the diversity of your investments – could you get better returns by spreading your money around more?
  3. Commit to pensions and make the most of personal and employer contributions.
  4. Consider steps you can take to increase your savings – whether it is increasing pension contributions, working for longer, or taking on a part-time job in retirement.
  5. Take an active interest in how your savings and investments are performing – don’t let apathy rule your future.
  6. Act sooner rather than later to adjust your strategy and contribute more whenever you can.

The value of your investment can go down as well as up and you may not get back the full amount you invested. The value of tax reliefs depends on your individual circumstances. Tax laws can change.

What could you buy with the average UK pension pot?

Wednesday, August 5th, 2015

The value of your investment can go down as well as up and you may not get back the full amount you invested. The value of tax reliefs depends on your individual circumstances. Tax laws can change.

Are you, or will you be, an over-60s socialite?

Wednesday, August 5th, 2015

If that latter description sounds like you, or someone you know, you’re in very good company. Many of today’s over-60s are living life in a way that has a lot more in common with 20-somethings, despite four decades of age gap. Being part of a circle of close friends, catching up on social media and even the odd spot of online dating; they’re enjoying life to the full in a way that previous generations would hardly have dared to dream of.

Why has there been such a seismic change in how the over 60s live? We’re all (mostly) living longer and healthier lives and hitting our 60s means many of us have 20 years or more of freedom when we don’t need or want to work any longer. We like to feel good, look good and enjoy ourselves. We also have the financial clout – the power of the grey pound has never been stronger or better catered for – and there’s growing recognition that life in your 60s and beyond can be just as much fun and just as fulfilling as it was in your earlier decades. (The world’s oldest supermodel is the much in demand 87-year-old Daphne Selfe, so there’s plenty of time to live out our dreams, no matter what age we are.) It’s little surprise then that turning 60 is often called the new 40… but should it even be known as ‘the new 20-something’?

With the daily routine behind us, over 60s are free to do the things we’ve always wanted, whatever that looks like. Following in Michael Palin’s footsteps and trotting across the globe, becoming a social butterfly, getting fit or taking up voluntary work are what we really, really want to do (to steal a line from the Spice Girls) when we’re in our 60s. There might just be time to fit in a hobby or two, but sitting around and relaxing just isn’t something that floats our boat.

Of course, this much fun doesn’t often come cheap and having enough money to last through your 60s and beyond is one sure-fire way of making the most of your life. Cruising round the Med or taking a once in a lifetime trip to the Andes isn’t something you can do if you’re relying on the State Pension to see you through. The good news is many of us have done our planning, saved hard for our retirement and are able to reap the benefits so that we can live the life we want. And with recent pension reforms allowing people to access their pensions from the age of 55, planning your finances has never been so important.

As Julie Hutchison, Consumer Finance Expert at Standard Life, says:

“Retirement can be one of the most liberating and exciting life stages. The recent pension freedoms have opened up new possibilities in retirement, allowing more of today’s recent retirees to enjoy the sixty-something socialite lifestyle.”

The value of your investment can go down as well as up and you may not get back the full amount you invested. The value of tax reliefs depends on your individual circumstances. Tax laws can change.

Is an interest rate rise on the horizon?

Tuesday, August 4th, 2015

The Governor of the Bank of England (BoE) is hinting at interest rate rises again.

“It would not seem unreasonable to me to expect that once normalisation begins, interest rate increases would proceed slowly and rise to a level in the medium term that is perhaps about half as high as historical averages.  In my view, the decision as to when to start such a process of adjustment will likely come into sharper relief around the turn of this year.”

Those measured words, delivered by the BoE Governor Mark Carney in a lecture at Lincoln Cathedral, were the latest indication that the 0.5% base rate, born in March 2009, may not survive until its seventh birthday. Mr Carney has some unfortunate form in talking about interest rate rises, but in that all-too-dangerous phrase, this time it’s different. For a start, the rate of inflation will begin to pick up towards the end of the year, as last year’s sharp fuel price cuts drop out of the yearly figures. At the same time earnings growth has been increasing – the latest statistics show an annual increase (including bonuses) of 3.2%. Unemployment remains at relatively low levels and the figures for overall economic growth released in late July showed that the economy had bounced back from the first quarter’s disappointing 0.4% growth.

A further factor, although probably not one that the Bank would own up to, is that US interest rates also look set to rise by the end of the year. In a July presentation to the US Congress, Janet Yellen, Mr Carney’s American counterpart, suggested that the conditions for an interest rate increase (from a 0%-0.25% range) would arrive “sometime this year”. She also echoed Mr Carney’s view that once rates started to move upwards, the path would be gentle and rates would remain below the level viewed as “normal in the longer run”.

All of which means that your bank and building society are unlikely to pay you very much more interest on your deposits in 2016. However, unless you are an additional rate taxpayer, changes due in 2016/17 will mean you have up to £200 less tax to pay on your interest. If your need is income, then there are plenty of other options that can provide a higher income return. For example, the 2016/17 dividend reform announced in July’s Budget will allow you to receive up to £5,000 of dividend income with no tax to pay, regardless of your personal tax rate.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.