The squeezed middle & half time whistle
Getting on with your financial planning
A hockey game lasts 70 minutes and a rugby match lasts 80 minutes. With a bit of a break in the middle and some extra time, the overall game might last between 75 and 85 minutes. Change minutes to years and 75-85 is about the life span of the UK public, so if you’re reading this about age 40, you can probably hear life’s half time whistle being blasted.
They say life starts at 40...unless you’re 50, then they suggest that life starts then! Whichever is true, it’s time to get on with your financial planning and make it happen.
Mortgaged, with a partner or spouse, and possibly some young children, your good education has pushed you into middle management and you share the household bills, but there’s not much excess to enjoy yourselves above the annual holiday abroad. You hope the next promotion might help a bit with cash flow. A few bits of savings, possibly a small shareholding and your employer has you in the workplace pension scheme.
You have not made a will yet, but it’s on your list and you have some life cover to repay the mortgage and you think your partner has some death in service cover from their work.
Your parents try to help where they can, and are generous to your children as long as it’s equitable. Other than this, there is not much more planning in place.
So what to do?
Prepare a budget planner to check real income and outgoings to see that all of your money is going where you expect it to and if any savings can be made.
Check what you’ve got from your employer and to ensure that any debt, such as the mortgage, can be repaid if you die and still leave some cash for your partner and children to make ends meet thereafter, especially if you are the main income earner.
Also check the ill health position if you are unable to work. How long will you be paid? Some life covers come with the addition of Critical Illness Protection and you might want to check your policy for this benefit. Other protection plans might include income replacement as the benefit. Standard Statutory Sick Pay is not high, so make sure you have enough cover to protect the family in the event of accident or illness.
Have you checked your pension death benefit nominations? Did you last make them when you were without a partner, or kids for that matter, and your mum is still the benefactor? Check it out.
Higher Rate Pension Tax
If you are a higher rate tax payer, then pension contributions might attract higher rate tax relief which is well worth claiming. Don’t forget to add in taxable benefits, like a company car, that might push you into higher rate tax. SaidSo can help you look at this during your financial planning process.
Who pays what tax?
If you and your partner have a big disparity between your incomes then there might be some tax savings to be made. If you are a higher rate tax payer and your partner is not, you might want to make sure any taxable savings are in your partner’s name to keep the tax take down to a minimum.
Use your Tax Allowances
Noting the point above, let’s not forget some good opportunities, such as tax efficient ISA allowances which might keep the Chancellor’s opportunity of reducing your overall returns to a minimum.
Make a will
Always worthwhile, especially if you have dependants. Try to use a solicitor although we appreciate that cost might well be an issue here. If you have a really limited budget, use a Will Kit, available from any good stationer. Also, you can find some cost reductions in promotional ‘free will weeks’. Have a look out for these.
It might be hard to believe that the kids running around your home, or needing their homework done, will leave your nest at 18-ish and head off to University or an Apprenticeship. Starting some savings for them now might be worthwhile, however small, and in our experience, ethical investment for children is topical. SaidSo.co.uk can help with this important area if this is an issue for you and the family.