8-12 November is the Money and Pensions Service’s Talk Money Week and we want to encourage people to discuss all aspects of money.
To help start the conversation, we asked our experts to answer five key questions on topics as wide-ranging as the growing threat of financial scams, discussing money with children and planning for inheritance.
Do you know how to achieve a comfortable retirement?
Jon Greer, head of retirement policy at Quilter says:
“Planning for your retirement and saving sufficiently into a pension is vital as it ensures you will have enough money to live a comfortable lifestyle once you have stopped working and having no plan in place is one of the biggest mistakes you could make.
“While auto-enrolment has had a positive impact on uptake of pensions and retirement savings, many people are still struggling to get to grips with planning their finances for later life. The financial regulator’s Financial Lives survey showed that 9.6 million UK adults were not saving towards a pension at all, and some did not know if they were or not.
“This Talk Money Week take some time to understand your future finances and help ensure you achieve a comfortable retirement. A few things to consider include:
Not relying solely on the State Pension
“The current full rate for the new State Pension is £179.60 per week for the 2021/22 tax year, far below what most people consider enough to support their retirement. To ensure you are comfortable financially in retirement, it is important to save additional funds to supplement it.”
Reconsidering if you previously opted out of auto-enrolment
“If you previously opted out of auto-enrolment, it would be wise to reconsider and re-join as soon as possible as you are likely missing out on valuable retirement benefits – not only your own savings towards retirement, but your employer contributions too.”
It’s not too late, or too early, to start saving
“Some people consider saving from a young age to be unnecessary, but it is in fact one of the most important times to be contributing as that money will get the most bang for its buck thanks to the turbocharging effect of compounding on long term investments.
“Additionally, if you are someone who has left saving for retirement until later in life, it would be a huge mistake not to engage with your pension pot. While it may seem like a daunting task it needn’t be, and your future self will thank you for it.”
Are you saving for your kids in the best way?
Emma Prince, financial adviser at Quilter says:
“Most parents want to give their child the best start in life but not all savings products for children are created equally. With interest rates at record lows, cash savings accounts are failing to even give an inflation beating return meaning account holders risk losing money in real terms. Similarly, many parents seek the safe haven of premium bonds but unless the child gets very lucky, they are unlikely to see a good return.
“While cash Junior Isas do generally provide returns above the rate of inflation they will not benefit from potentially 18-years of investment returns. Our calculations* show that if parents contribute the full £9,000 each year for the full 18-years, then their child has a chance of starting adult life with pot worth a quarter of a million pounds. Definitely something to talk about!”
* Calculations based on annual growth of 5%. Assumes charges of 1% per year. For illustrative purposes. Actual investment returns may vary over time and markets can go up as well as down.
Can you identify fraudulent websites and avoid cyber-attacks?
Louise Cockburn, information security culture manager at Quilter says:
“Cyber-attacks increasingly cause interruption and loss to businesses and customers alike, particularly vulnerable customers who are often not as well informed on how to identify cyber security issues.
“It is critical that you do everything you can to keep your information secure. The Covid-19 pandemic and subsequent trend towards more reliance on the online world has added new challenges for people and businesses to contend with, making it all the more important to ensure your cyber security awareness remains a priority.
“There are a number of steps you can take to protect yourself and your family. This Talk Money Week, take some time to discuss cyber security and data protection with those close to you and help protect yourselves from fraud.”
Topics to get you started include:
- Protecting email and other accounts by enabling multi-factor authentication
- Using Password Managers or creating secure passphrases (using three or four random words, for example)
- Checking a website is secure when entering personal or payment information (for example, does the address start with ‘https’?)
- Identifying fraudulent impersonations of official company websites, ads or emails
- Checking for disguised addresses such as misspelled or otherwise deceptive URLs (eg. cybercriminals will use cyrillic characters in place of similar Latin ones to create very convincing spoofed website and email addresses)
Read more advice on staying safe from scams on our ‘Stay Safe’ pages.
At what age is it best to start talking to kids about money?
Stewart Perry, head of responsible business at Quilter says:
“Money is such a big part of society and yet parents often start talking to their children about money when they are in their late teens and about to move out. The reality is what children learn when they are young will shape their behaviour as an adult.
“Therefore, its critical to talk to children about money as early as possible. Research from the Money Advice Service shows that attitudes toward money are formed as young as the age of seven. There are lots of money lessons that you can teach children such as the value of saving, the power of delayed gratification and even the concept of investing.
There are some great resources online including free resources from financial education charity, MyBnk, to help kickstart the conversation. Ensuring your children are engaged with money from a young age will help them to build a healthy relationship with it in adulthood.”
Have you discussed your plans for your wealth when you pass away?
Rosie Hooper, chartered financial planner at Quilter says:
“While it can be considered an uncomfortable conversation to have, making sure that your family understands your wishes and the plans you have in place for your inheritance will reduce the stress on your loved ones once you pass away. What is likely to be an already emotional period will be made that bit easier by you having had an open conversation about your finances and making sure that things are not left confused or contested in a long, drawn-out affair.
“When planning how to pass your wealth to those closest to you, there are many options to consider. Receiving financial advice and having an open conversation with your family will not only ensure that your wishes are fulfilled in the most tax efficient way possible, but your family can better understand their possible financial futures as well.
“We tend to find some people may over-estimate the inheritance they will receive. Having conversations earlier will put your own mind at ease, and better prepare your beneficiaries for the future as well.
“Additionally, if there was a sudden death or illness in the family then it would be beneficial to have already had those conversations, so the earlier you can begin discussing your estate planning openly with your family, the better. Alongside estate planning conversations with your family, discussing the possible need for a Lasting Power of Attorney (LPA) could also be beneficial. Having an LPA in place can provide you with peace of mind as you know who would manage your affairs if you were to become unable to yourself.”