The retirement mistruth

If you pay much attention to the media and advertisers, you may think that retirement is all about riding jet skis, sipping sherry on the French riviera or cuddling grandchildren. No doubt you’ve seen one, if not all, of the images on many of the retirement articles out there. Though those sorts of activities are an important part of retirement, a recent study has revealed retirement to be more of a double-edged sword. For many, the first few months can involve a lack of purpose leading to something somewhat akin to a later life crisis, according to Harvard Business School professor Teresa Amabile.

It’s certainly hard not to lie about retirement because of the social norms associated with it. It’s meant to be the best time of a person’s life, that they’ve been working hard for. But it causes people to say one thing, and feel another. Professor Amabile interviewed 120 professionals about their views of retirement, at different stages of their careers.

“People think of planning for retirement as a financial exercise, and that’s all. It also needs to be a psychological and relationship exercise as well.

“We need to think about who we will be – who we want to be when our formal career ends. The people in our study who do that, tend to have a smoother transition.”

Revelations also arose when it came to how respondents described themselves. People often used their previous job title as a suffix to their retired status, usually saying that they were a ‘retired librarian’ or a retired ‘research chemist’ and the like. Though it’s important to be proud of what you’ve achieved during your career, it’s still important to prepare yourself for retirement as making sure you’re of sound mind as well as sound wallet will lead to better wellbeing after you draw the curtains on your career.

However, this doesn’t mean that work has to come to an end. There are plenty of retirees out there who still consult in their previous profession – some even take the opportunity to pursue other avenues of employment that they’ve always been interested in. There are plenty of remedies to the retirement riddle that don’t need to resort to a kind of ‘forced leisure’ that is often associated with retirement. The truth is, you don’t have to relax or slow down if you don’t want to – as long as you remain realistic.

It’s something that a retirement plan can help with tremendously as, more often than not, you’ll have to think about what you’re going to do when the time comes. It’s not all just financial saving strategies and tax mitigation, it’s about getting yourself into the mindset that retirement is on the horizon, and when it comes to the day that you draw your pension, you’ll be all the more prepared to make the most of it in a way that’s true to yourself and who you are.

Weathering market storms

There’s no doubt that periods of market volatility can be very unsettling for investors. Nevertheless, history shows us that, although equities can certainly be risky in the short term, they remain the best-performing asset class over the long term.

Although market instability can be unnerving and hard to tolerate, it can also create attractive opportunities. During periods of general market decline, the share prices of high-quality businesses tend to fall alongside those of companies that are experiencing genuine problems. These instances provide astute investors with an opportunity to pick up high-quality stocks at bargain prices, boosting their overall portfolio in the process.

Even the most experienced investment professionals cannot ‘time’ the market consistently. It is all but impossible to assess whether prices have peaked or troughed, so keep your head and don’t allow yourself to be flustered into selling for the wrong reasons. Instead, during periods of market instability, take the time to assess your own particular situation. Ask yourself two key questions: ‘Does my investment portfolio reflect my investment goals, personal circumstances and tolerance for risk?’ and ‘Is my portfolio adequately diversified across different asset classes and geographical areas?’ If you cannot answer ‘yes’ to both these questions, it is probably time to review your portfolio.

It’s always worth taking the time to ensure that your portfolio is on track to achieve your long-term aims whilst weathering the shorter-term storms. For help and guidance, talk to your financial adviser.

Budget 2020 summary

Personal taxation, wages and pensions

The tax threshold for National Insurance Contributions will rise from £8,632 to £9,500. The move, first announced in November, will take 500,000 employees out of the tax altogether.

Those earning more than £9,500 will be, on average, £85 a year better off.

5% VAT on women’s sanitary products, known as the tampon tax, to be scrapped

There were no other new announcements on income tax, national insurance or VAT.

Tax paid on the pensions of high earners, including doctors, to be recalculated.


ISA deadline

With the ISA deadline coming up here are some answers to the most frequently asked questions:

What is my ISA allowance?

Every UK resident over the age of 16 has the same Cash ISA allowance. The allowance for the tax year 2019/2020 is £20,000. The only exception to this is young adults who are aged 16 and 17, who have an additional Junior ISA limit of £4,368.

You can save up to £20,000, tax-free, into any combination of permitted ISAs. For example, you may choose to spread your savings across a Cash ISA or stocks and shares.

Any interest you earn on your savings doesn’t count towards your personal savings allowance.

How does the ISA deadline work?

UK residents get an ISA allowance for each tax year. This dictates exactly how much you can save in a tax-free cash or investment ISA.

At the end of each tax year, the ISA allowance is reset. This is why the end of each tax year is known as the ISA deadline. In the UK, the tax year runs from 6th April to midnight on 5th April.

The ISA deadline is at midnight on 5th April. Savers have until this time to add to their tax-free savings accounts. If savers miss this deadline, they lose any unused allowance for that tax year.

Many savers feel pressured in the run up to the ISA deadline, as they’re keen to make the most of any unused allowance.

However, if you don’t think you’re going to use all of your allowance before the ISA deadline, you don’t need to worry. This doesn’t affect how much allowance you’re entitled to moving forward, it just means you haven’t taken advantage of all of your allowance for that particular tax year.

What ISAs are available?

This is where we can help. There are many different ISAs out there and we can help you find the best one that suits not only your circumstances but goals. Please get in touch to find out more.

Aberdeen Cyrenians celebrate £2000 donation

A charity in Aberdeen has been awarded £1,000 in Skipton Building Society’s inaugural £40,000 Community Giving scheme. The donation has also been matched by local financial advisory firm Phil Anderson Financial Services.

Aberdeen Cyrenians is a charity dedicated to supporting people affected by homelessness, violence, domestic abuse and other forms of social exclusion. Forty community groups and charities across the UK have been chosen to receive a £1,000 pot of funding after being nominated by mortgage brokers and employees of intermediary firms.

Aberdeen Cyrenians was nominated by Phil Anderson Financial Services who have offices in Aberdeen, Ellon and Inverurie. They also agreed to donate a further £1,000 meaning the donation to the charity was £2,000.
Skipton Intermediaries launched Community Giving to give intermediaries the chance to reward charities and community groups which support housing and homelessness. More than 90 nominations were received and now the 40 successful good causes have been announced.

Paul Fenn, Skipton’s Head of Business Development, said: “Skipton’s new Community Giving scheme enables brokers and employees of intermediary firms across the country to identify those groups which are doing great work and help them access a £1,000 pot of cash. “We are delighted to announce the first 40 community groups and charities to receive funding and we hope our donation enables them to continue to make a real difference in their work.”

Chris Bennett Taylor, Head of Corporate and Business Services at Aberdeen Cyrenians said “Firstly, thanks so much to Phil Anderson for nominating us for the grant through Skipton Building Society funding. It’s very generous for them to match the funding and hugely appreciated. Thanks also to Skipton for this valuable donation.”

Congratulations Neil!

A massive well done to Neil for being named Scottish Mortgage Adviser of the Year at the 2019 SME News Finance Awards.

We are proud of everything Neil has achieved over the years with us and we are sure he can continue to deliver outstanding service to all of our clients.

Marshmallows and financial planning

by Peter Brown, Senior Financial Advisor.

The Stanford marshmallow experiment is one of the most famous pieces of social science research out there. It has arguably influenced the way that many people live their lives, in addition to providing plenty of fun and interest for those with young children who are in the ‘I’ll try this at home’ camp.

So what is the marshmallow test?

A marshmallow is placed in front of a child, they are told that they can have a second one if they can go 15 minutes without eating the first one – then they are left alone with the marshmallow.

As you can imagine, many children ate the marshmallow as soon as the door closed, others fidgeted and wiggled as they tried to restrain themselves, eventually giving in. A handful of children managed to wait the entire time.

Following the experiment, the children were monitored as they grew up and it was found that those who waited for the second marshmallow performed better in exams, had a lower likelihood of obesity, lower levels of substance abuse and their parents reported that they had more impressive social skills.

In other words, it could be said that the ability to delay gratification is a trait that leads to valuable rewards in the future.

So how does this relate to financial planning?

The results from the experiment can easily be applied to the way you save and invest money. Simply put, if you save rather than spend now, you’ll gain greater rewards in the future.

How do you delay gratification?

Cutting out frivolous and impulsive purchases are a good start. Think to yourself: ‘do I really need this?’ Do you have to buy a coffee from the coffee shop near work? Do you have to eat out twice a week? Small acts of restraint can lead to a big pay off in the future.

When it comes to building a financial plan, it’s important to identify the levels of savings required for achieving goals in the future. Are you aiming for an early retirement or buying a holiday home? Setting out these goals early and developing a plan will help you to streamline your saving strategies so that you remain on track. Just remember, one marshmallow now or many marshmallows later.

Whatever you want to purchase: a boat, a house or a car, delayed gratification is an extremely valuable skill to learn when it comes to achieving your financial milestones. The more you see your savings grow, the more motivated you will be to keep going. It’s good to see your hard work pay off and over the span of a few years, you could see dramatic increases in your wealth and financial security.

New income protection cover for people suffering with mild depression, anxiety and other common illnesses.

Holloway Friendly has announced the launch of new income protection cover for people suffering with mild depression, anxiety and other common illnesses.

The provider says it wants income protection to be more inclusive and accessible, and for providers to address how the industry can insure people with old, or existing, mental health conditions.

One in four people experience mental health issues each year and one in six experience them in any given week. Mental health is currently responsible for 72 million missed working days, costing workers £34.9 billion collectively.

To find out more please contact Ryan Yule on 01224 900879.

Aberdeen Roughnecks Youth/Junior Sponsorship

As huge NFL fans we are delighted to announce our sponsorship of Aberdeen Roughneck’s Youth and Junior team.

The Aberdeen Roughnecks are a new American Football team that intend on continuing and expanding what the original Granite City Oilers team started and they have launched a youth development system, giving an opportunity for youths aged 14 and older to give American Football a go, eventually making their way into the British League System.

For more info please visit their facebook page

New North East Office

We are delighted to announce that we have signed a lease for Phil Anderson Financial Services to open a new office at the Crichiebank Business Centre in Inverurie allowing us to service even more clients throughout the NE of Scotland.

With many other positive things in the pipeline at the moment, it’s exciting times!