Ashley Brooks
2nd December, 2022
Blog, Hot Topics
2022 Wind Down Tips
2022 has been quite a unique year! It’s December and the World Cup is in full flow. The Germans are out at the first hurdle for the second consecutive time, and England look to have momentum.
In financial markets interest rates are rising to combat the highest levels of inflation we have seen in 40 years. The UK has had 3 prime ministers, the Queen has passed, and the Russians invaded Ukraine. A lot to take in and reflect on. Who knows what 2023 has in store.
Against such a backdrop, it is important to remember that whilst life can be very challenging, we must all stay focused on matters that we can control.
So, here are a few tips as we move to the end of the year:
Tip 1
One of the benefits of higher inflation for those in retirement, is that the state pension is going to jump up considerably next year. This means the cost of buying additional years of qualifying service will also rise. If you are likely to be short of the 35 years National Insurance payments required to get the full state pension, you have only until 5th April 2023 to buy missing years prior to 2016. After this date, you will lose the ability to buy the missing years. Check with friends and family who are:
- Nearing state pension age
- Won’t achieve the required 35 years’ service within their working life
- Are self employed
One missed year prior to 2016 would cost £800.80 in return for a state pension addition of £275 pa – so effectively a return on your money in just under 3 years.
If you do have missing state pension years, then it is worth visiting https://www.gov.uk/check-state-pension
Tip 2
It makes sense to pay into your private pension even when you are retired. Investing £2,880 into a pension will result in the Government adding £720 to your investment every year. Effectively giving you a 25% uplift on your contribution. You can contribute through to age 75 this way.
Tip 3
Ensure you have Lasting Power of Attorneys (LPA) in place. This is essentially a living Will.
It might be good news for some to know that your spouse has no legal power over your affairs if you lose mental capacity! But without an LPA your family will have to seek permission from the court of protection to access your finances. This is stressful, slow and expensive, both in time and money. You can nominate two attorneys plus a reserve.
Back to the here and the now, inflation is coming down and markets are starting to believe it. We have been waiting for it and have planned for it within our portfolios. As a result, our portfolios have had an excellent November both in terms of actual numbers and relative to our benchmarks. Our Portfolios were up between 2.83% (Very Low risk) and 4.27% (High Risk). However, there is a long way to go as the inflation story will be around for a while yet.
With the absence of unknown shocks, this time next year we expect inflation and interest rates to have settled around the 4% mark. Early results are positive in terms of our hard work in repositioning our portfolios this year.
Have a great weekend, stay focused, and good luck to England!
