ARE you one of the winners or losers of the past year?
For something so small that 100 million of them fit on a pinhead, the coronavirus has achieved what successive governments have not: it has got us thinking seriously about our retirement.
That’s a win-win situation right there. Government ministers are smiling like Cheshire cats, and forward planning can only be good for us.
A survey by the pensions company Aegon and Next Wealth has found 40 per cent of financial advisers have experienced a surge in demand for retirement advice. This topic alone now counts for 58 per cent of their business, and advisers expect it to rise even further over the next three years.
We have retirement on our mind.
We already know that working from home has given many of us a new perspective on ... well, being at home.
We’ve found that spending most of the day within our own four walls hasn’t been half as bad as we expected.
Add to this that many of us over 55 are worried about our job security, and dread facing the prospect of having to go job-hunting again.
Over half of advisers note that their clients are thinking more of their health and their longevity, and generally re-evaluating what is important in life.
Then there are those who had no choice, those who had drastic change foisted upon them, and have already been made redundant.
With all of this going on, it doesn’t take long before those of us in our 50s begin to at least consider the prospect of early retirement – a thought many of us are having for the first time.
Has the uncertainty of the past year caused thoughts of retirement to creep into your mind?
The good news is that our options at retirement have never been more numerous.
But as I always say, more options mean more complexity, and since the Chancellor of the Exchequer descended on his cloud and gave us the new pension flexibilities we’ve had since 2015, drawing down your pension can be a minefield of complicated new rules and, if you act without advice, unexpected and quite unnecessary tax bills.
You always know that a new trend in the financial world has really taken off when it throws up a new term for us to play with. The second group of winners in the past year have been dubbed ‘accidental savers’ by the financial consultancy LCP.
In their latest report, LCP has crunched some numbers and found that around six million of us are actually better off than we were before lockdown. This is mainly because we saved money on eating out, socialising, personal care and hairdressers, and not using the car or the train quite so much. Then of course there’s the extremely touchy subject of being unable to fly off to the sun, for a well-earned cocktail at the beach bar.
The boffins at LCP – including former pensions minister Sir Steve Webb – reckon that many of us have actually managed to squirrel away thousands. What to do with that money? Well, paying it into our pensions has been a favoured option, again fuelling the surging demand for retirement advice.
Remember, in your pension, your money snowballs over time, so that a pension is the only shop where you can buy £50 notes for £20. And it didn’t have to close for lockdown, either.
And now to the losers. Unfortunately the past year has had its fair share of those, as well.
Not everyone has been lucky enough to save. The Office for National Statistics (ONS) is telling us that nine million of us had to resort to higher-than-usual borrowing last year, particularly in the run-up to Christmas.
The real losers, however (and I’m afraid this may sound familiar), are the self-employed – and within that, tradespeople in particular.
One of the adviser networks has found three out of four tradespeople say the pandemic has taken its toll on their mental health. Many say they’ve suffered stress and low self-esteem, and are getting two to three hours less sleep than before it all began a year ago.
It’s no wonder they can’t sleep - half of self-employed tradespeople are more worried than before about the future of their business, and a quarter actually believe they are facing total and permanent closure.
Whether self-employed or not, it’s clear that your mind is probably focussed on the future, on your retirement, perhaps even on hanging up your workboots a few years early.
We can help you untangle all the issues around retirement today.
Winner or loser, it doesn’t matter. Give us a call!
:: Michael Kennedy is an independent financial adviser and pensions specialist and can be contacted on 028 71886005. Further information on Facebook at Kennedy Independent Financial Advice Ltd or at www.mkennedyfinancial.com
