Just when it seemed we were nearing a kind of resolution to one painful crisis, another has started. While the lifting of Covid-19 restrictions in the UK has been a huge relief for many, the financial cost of the pandemic is now really starting to bite. This is now likely to be exacerbated by the responses to Russia’s shocking attack on Ukraine as sanctions bite and inflationary effects on the cost of living rise. Spring is a good time to review and reflect, not least in these circumstances.

The invasion of Ukraine has shaken the entire European continent, as families, businesses and governments struggle to find certainties in the midst of a growing humanitarian crisis. Global markets, having misinterpreted Putin’s strategy, have unsurprisingly been sent into panic mode.

Recently, we wrote about the rising rate of inflation, and how we saw 2021 coming to a close with inflation sitting at its highest level in almost 30 years, at 5.4%. What was not so clear, though, is just how much the effect of rising inflation in real terms is having, and will continue to have, on your individual financial circumstances.

The ‘2021 Inflation Components’ otherwise known as the Office for National Statistics (ONS) “basket of goods,” are included within the overall inflation calculation.

The basket of goods is frequently updated, and the ONS publishes its monthly measure of inflation, the Consumer Price Index (CPI), to reflect how much the prices for these goods have changed in the 12 months, since the same date last year.

This illustration shows Transport accounting for almost a third of the headline inflation figure. But on a deeper level, there are three sub-sectors with annual inflation greater than 25% - fuel and lubricants; second-hand cars; and air flights.

From an all-time low of just 0.1% in March 2020, to its highest figure in decades, it is fair to say that the security blanket around the inflation rate has been well and truly pulled from under us.  

Our team at Simpson Financial Services often finds that changes such as the rate of inflation and cost of living are not fully understood. Nor is the impact that increasing inflation can have on long-term savings and overall financial planning.

If you are feeling deflated by the bubble bursting and wondering how the inflation rate will impact your financial circumstances, please read on as we discuss why now is a perfect time to review your tax, investments, and overall financial planning.

It’s hard to believe that we are a month on from Christmas and New Year already. Other than when the next Bank Holiday and this year’s Jubilee celebrations are, where else are your thoughts drifting this year? Well, sorry, but you are going to have to come back from dreaming about your long hot summer holiday for now, because the tax year-end is almost upon us. And whilst it might not be top of your favourite things to do, if you are not already forging ahead, personal tax planning and efficient financial calculations now could be more beneficial than you may think.

Tuesday 5th April is the official 2021/2022 tax year-end. And to make the whole process a little more appealing, read on to find out all you need to know about making the most of tax relief, exemptions, and personal tax allowances.

We certainly choose our moments to bring some slightly more upbeat financial updates! Yes, we are coming to the end of another year in which we have continued to see the ongoing financial impact of the COVID-19 pandemic, furloughed staff, panic hitting the petrol forecourts, and fear of potential food shortages during the festive season for various reasons. But research from Q3 2021 shows that dividend payments are headed in the right direction once again in all major markets. Indeed, there is evidence of a global dividend recovery, with dividends expected to reach pre-pandemic levels before the clock strikes midnight on New Year’s Eve.

In early 2021 we saw the next step in the UK government’s plans to reform social care. And since our November post around means-testing for social care provisions, further detail has been revealed around how the social care cost cap will work in practice.

Currently, one in ten of those aged 65 in England are likely to be hit with social care costs of £100,000 or more during their lifetime. But September brought the Prime Minister’s announcement that from 2023, the government propose a social care cost cap of £86,000.

Still taking on board some of the announcements coming out of the Autumn Budget and Spending Review? Are you wondering what the updates will mean to you and your family for the coming months and years?

Well, with this first Autumn Budget in three years, there is certainly some positive news. And although not completely post-pandemic, there were hints that the dramatic economic impact felt during the past 18 months might be, in some way, eased.

Unemployment has reduced to 2.5%, with over two million less registered unemployed than had been anticipated. And although expectations of an increase next year to 5.2%, this is still drastically below the earlier forecasts of 11.9%.

And then came The Office for Budget Responsibility (OBR) statement that inflation is likely to rise once again from the September figure of 3.1% to an average of 4% over the coming 12 months.

But it was clear that the Chancellor wanted to bring about some immediate benefit for households and businesses, along with the usual longer term focus, both in local and national investment.

Since our recent post about saving for retirement and pension planning, the office for National Statistics (ONS) has released further information highlighting how the retirement income gap has been dramatically impacted through COVID. Although it may be decreasing slowly, as long as the gender pay gap continues to live on, so too the gender pension gap will also continue.

Are you heading for your older years, but want to free up some equity to enjoy life while you are still fit and healthy? Or even an ‘elderpreneur’ (indeed, that word does exist!) who wants to start your own business, and would be grateful for some funds to set you up? If you do not want to break into your savings or alter your pension plans, you might have considered a lifetime mortgage.

We last spoke about mortgages, more specifically remortgaging, back in February. But we know an awful lot could have changed in your lives since then. With energy bills rising, a growing shortage of fuel and supplies, and more impact from the pandemic gradually coming to the fore, we certainly have plenty to think about day to day.

One area in which Simpson Financial Services can take care of all the thinking for you, is if you’re considering mortgaging a property in later life.     

Your family have possibly flown the nest. You could be nearing retirement. And many things around you just look as though they could do with an update. Or you might feel you need a fresh start as you go through separation, divorce, bereavement, or starting life with a new partner.

Further to our ‘Saving for Retirement’ post in July, we now have a more definitive and updated post pandemic cost of retirement to share with you.

With additional (dare we say, more realistic and modern) goods in your basket, the latest update from the Pension and Lifetime Savings Association (PLSA) includes everything from hand sanitisers to a higher personal grooming allowance, an increased socialising and eating out budget, right down to the pandemic favourite for binge watching across all age ranges – your monthly Netflix subscription!

I am sure you could think of other ways to spend your retirement, but at least you will be able to keep occupied in the deepest and darkest of winter evenings, knowing you are still comfortably within your retirement budget.

We were certainly led to believe that Boris Johnson had means-tested social care high on the agenda when he first entered ‘Number 10’ over two years ago,

“My job is to protect you or your parents or grandparents from the fear of having to sell your home to pay for the costs of care. And so, I am announcing now – on the steps of Downing Street – that we will fix the crisis in social care once and for all, and with a clear plan we have prepared to give every older person the dignity and security they deserve.”

Yet, here we are, having come through one of the biggest crises of our generation, and regrettably means-tested social carehas been replaced with other ‘more pressing’ matters. Not exactly surprising if you have been following the issue of social care funding, for which a Royal Commission in 1999 also fell flat, other than a few enquiries, reports, and more proposals since.

There is some apprehension in the air around cuts to the Pension Lifetime Allowance following the Budget earlier this year. In a bid to recoup some of the Government’s 2020/2021 losses, following the Budget deficit, it could mean you will end up paying more tax in your retirement, or even sooner than that.

£300 billion in losses are going to be slowly but surely clawed back through one means or another. This could mean changes to Pension Tax relief or Pension Lifetime Allowance (LTA). And although they may not be announced until the November Budget, we want you to be ahead of the game, with plans in place to avoid any nasty financial shocks.

Are you heading for retirement? Have you gone through a divorce, separation, or a bereavement and you need to think about financial plans for later life? Do you have elderly relatives who are worried they might not have sufficient income to see them through retirement? It is almost a year since our last retirement blog, and along with potential personal economic impact following the pandemic, some interesting research findings around pension planning theory have been released, so we thought this might ease your concerns. To put it very simply, whenever you start saving for retirement it is never too late!

You might think you need to start planning and making pension contributions as soon as you start work, and it could be too late for you if you have eaten into your savings, without considerations for a pension pot. Indeed, that was what we were taught by the older generations. And we always did what we were told, didn’t we?!

As if 2021 wasn’t life changing enough with the pandemic, there was also the small matter of BREXIT thrown into the mix. For some, there will be an insignificant impact. Certain items may take longer to appear on the supermarket shelves or could disappear altogether. But we’ll soon find alternatives. Some employees may have been impacted to a greater degree, as with some business owners. For others, it could create a challenge, or an opportunity, to reconsider life in the UK and whether that is what they want for their future. Here, I’m talking about tax rules for living abroad, how they have changed, what it means for residency, and how we can assist in your financial planning if living abroad is something you are considering.