Achieving your goals
your financial plan should be about making the most of your life. We
all know we are going to die one day, so why not aim to ensure that you
have lived your life to its potential, and have done all the things you
set out to do?
A strong financial base will give you the freedom to make choices for you and your family.
What happens to people without a plan?
all have good intentions, so here are some genuine statistics which
might prompt you to some action. We probably all know people who fit
into these categories...
We are all living longer
In 1901 the average life expectancy at birth for a man was 45. In 2002 this was 76. For those who make it to 65, men can expect to
live until 81, women to age 84. Source: UK Government statistics
The state can't afford to provide for you
People tend to
believe, wrongly, that the state will provide for them. As the
population ages, the ratio of working people to retired will only get
worse, meaning there will be fewer people available to pay for
The basic state pension is currently £95.25
per week for a single person. This increases at a slower rate than
average earnings, meaning it loses buying power over time.
The question is whether you would like to live on this amount when you get to retirement. What would you have to give up?
an ageing population, it is no surprise that the Government is forced to
cut benefits and extend retirement ages. Current proposals aim to
increase the state retirement age to 68.
Savings, what savings?
to a study by the Yorkshire Building Society, the average person's
savings would last only 52 days. Think about your own outgoings. How
long would your lifestyle last if you lost your income? Would you have
enough put by to cope with an emergency?
"I won't get sick"
Hopefully you won't, but you might.
According to the Department for Work and Pensions in 2007, you had a 1
in 13 chance of claiming on life assurance; a 1 in 8 chance of claiming
for critical illness, and a 1 in 5 chance of claiming on an income
protection plan. Yet, according to Mori in 2008, the same amount of
people insured their teeth as their incomes! That's 6% if you're
If you get sick the Government will give you £89.80
per week (ESA, long term benefit). If you do not pass the rigorous
tests to get this benefit you are deemed to be able to look for work
and therefore go on lower Jobseekers benefits.
How many days just to pay your tax bill?
Adam Smith Institute calculates that you need to work until June 25th
to pay your tax. That means, your money is not yours until you pass
this point. Yet people talk about their income before tax. If you think
of the expense of your tax bills, this puts your disposable income into
A debt mountain
The average household debt in
the UK (excluding mortgages) is £9,180; if you take out those who have
no personal loans this rises to £21,355. If you include mortgages this
is £58,290. See creditaction.org.uk
Many people use debt to fund their existing lifestyle, which only serves to feather the nests of those lending money.
well as this, there is a worrying trend to use interest only mortgages.
This help people to save money and provides flexibility, but many
people do nothing to work towards paying off the capital of their
loans. This could lead to severe consequences later in life.
How much money do I need to retire?
this depends on your expectations in retirement. As a rule of thumb,
you should be able to achieve an income of around 5% a year from your
cash assets (pensions, ISAs etc). Thus, if you have £100,000 this would
equate to roughly £5,000 per year. Of course, this all depends on the
age you are, how much risk you want to take and so on.
Want some help?
What this means is that the traditional retirement no
longer applies. We are more active, and live for longer; therefore we
need more money and probably want more flexibility.
planning is about breaking your financial life into manageable chunks
so you can make progress in all of these. Your plan will allow you to
prioritise your needs, so that the most important are dealt with first.
work closely with our clients to develop and maintain their financial
plans. If you would like some help in preparing your plan, please