Tag Archives: pension

What editors think about planning financially for the future

Last month, Liz Jones asked in the CIEP forums for editors’ thoughts on preparing for the future, from a financial point of view. Liz mentioned pensions specifically, but it became clear from the responses that the picture is more complicated than that.

Some people described how they were able to save a good chunk of their earnings each month or year. For many others, especially when working freelance, earnings can fluctuate, so it can be difficult to save a fixed amount per month, or to save as much as we think we should be saving! This article considers the different approaches editors have, and also provides a list of useful links recommended by members.

  • Starting to save
  • Dividing up earnings
  • Pensions
  • ISAs
  • Other investments
  • State pension (in the UK)
  • Financial advice
  • Not stopping
  • Summing up – there’s no one size fits all, but make a start!
  • Useful links

Starting to save

One point that came up again and again was that it was more important to make a start with saving for the future – any kind of start – than it was to be able to implement the perfect retirement plan right away. It turned out I wasn’t the only editor who, until recently, had been burying their head in the sand, hoping the future wouldn’t apply to them. Obviously, there are ideal levels of savings to aspire to, which might keep us in the style to which we’ve become accustomed. But if that isn’t achievable right now, because of fluctuating earnings and other financial commitments, it’s still better to start saving something than nothing at all, and then build things up over time.

A tip I heard was to frequently (say, every six months) raise your pension contributions by £5–10 or so. You won’t feel it, but it all starts to add up.
– Sophie Playle

Dividing up earnings

Various editors who responded said that they saved 30% or even 50% of every single invoice, putting aside this money to cover tax, National Insurance, pension(s) and other savings. However, this is clearly not possible for everyone to achieve, and a lot depends on levels of earnings, stability and regularity of earnings, other sources of household income and other financial commitments. A clear theme was that everyone’s circumstances are different, and no advice can apply equally to everyone. Others explained that they set aside fixed amounts each month to pay into pots to cover tax and savings. Any surplus left over in the business account in good months could then be invested in one-off payments to pensions or to buy business equipment.

Pensions

Most of the editors who responded were thinking in terms of pensions as the main way to save for their future. Obviously this is a huge and complex subject, and off-putting to many, and John Firth has written a useful introduction to this topic here. Many editors reported that they had small pension pots (sometimes several) from past employers, and some had decided to consolidate these to make them easier to manage. Several people shared useful links to advisory services (see the ‘Useful links’ section, below).

The key was to stop thinking, ‘Well, I haven’t got enough time left to accumulate a sensible pension’, and start thinking, ‘Where is the money I am able to spare likely to grow best?’ From this point of view the label ‘pension’ is incidental (although obviously the attached rules and regulations still have to make sense for the individual’s position).
– Kersti Wagstaff

ISAs

The other main type of savings account people mentioned, apart from pensions, was the Individual Savings Account, or ISA, which is relevant to savers based in the UK. Some people had ISAs as well as pensions, while others were saving only into an ISA. This is an example of where taking professional financial advice can be crucial.

I followed the advice of a financial adviser about 11 years ago, and set up an ethical stocks and shares ISA … I pay into it every month, and it has performed very well indeed during that time … I’m really glad that I got the advice at that point.
– Hester Higton

Other investments

Aside from pensions and ISAs, people also mentioned factoring the value of property they owned into retirement plans. Other suggestions included investing in businesses via crowdfunding appeals, and even investing in art.

State pension (in the UK)

Editors based in the UK mentioned the state pension as forming an important part of their retirement plans, even if they did not expect to be able to live on it on its own. The benefit of the state pension is that it is protected from inflation. However, receiving the full state pension does depend on a record of National Insurance payments. Several editors mentioned that because they had lived outside the UK for periods earlier in their lives, their state pension had been impacted. You can check your UK state pension entitlement here.

Financial advice

Another common theme was the importance of taking professional financial advice. Many members commented on how pleased they were that they’d consulted a financial adviser over retirement planning (even if that wasn’t what they’d originally approached the adviser for). Others wondered if they had enough to approach a financial adviser to talk about. The general feeling was that retirement planning was such a big and important subject – with such far-reaching significance for most of us – that it was well worth consulting a professional. Just as we would advise people considering editing their own books or getting their mates to do it …

Anyone who is considering moving overseas would be well advised to do their research. I had a small personal pension and planned to move the money to an Australian fund but was caught out by a change in UK law after I moved here. It prevents me from moving the money until I turn 55.
– Kerrie-Anne Love

Not stopping

Not all members who responded were counting on retirement, or expecting to stop editing completely. Some members wrote that they positively wanted to continue working because they enjoyed it, while also managing to save more now they were older.

Summing up – there’s no one size fits all, but make a start!

In summary, it’s clear that planning financially for the future is a very individual decision, and there’s not going to be a solution that suits everyone, or indeed is possible for everyone. But the most important message seemed to be that it was better to get something in place to help manage your finances and support yourself in the future than nothing at all – and that it was never too late to do this.

Useful links

Thanks to the following contributors

Louise Bolotin, Catherine Booth, Margaret Christie, Hannah Close, Louise Duckling, Catherine Dunn, Kate Haigh, Jane Hammett, Kay Hawkins, Hester Higton, Gerard M-F Hill, Andrew Hodges, Margaret Hunter, Sue Littleford, Christopher Long, Kerri-Anne Love, Sarah Lustig, Kathleen Lyle, Hetty Marx, Christina Petrides, Sophie Playle, Abi Saffrey, Cory Stade, Melanie Thompson, Kersti Wagstaff, Anna Williams.

About Liz Jones

Liz Jones has been an editor since 1998, and freelance since 2008. She works on non-fiction projects of all kinds, for publishers, businesses and independent authors. She’s
also one of the commissioning editors on the CIEP information team.

 

About the CIEP

The Chartered Institute of Editing and Proofreading (CIEP) is a non-profit body promoting excellence in English language editing. We set and demonstrate editorial standards, and we are a community, training hub and support network for editorial professionals – the people who work to make text accurate, clear and fit for purpose.

Find out more about:

 

Photo credits: hazy mountains by Simon Berger; growth by Micheile Henderson, both on Unsplash.

Posted by Abi Saffrey, CIEP blog coordinator.

The views expressed here do not necessarily reflect those of the CIEP.

 

Planning for your financial future: top ten areas to consider

Self-employment brings with it many benefits, but not often financial predictability. Some months, it’s all about bringing enough income in to pay the bills. Paul Hammett looks at where to start if you’re looking towards your financial future.

I’ve been a financial advisor for 30 years, and have talked to a lot of clients about how they can plan for the future and make the most of their money. This article lists the top ten areas to consider.

1. Do you need life insurance?

The vast majority of people with children should consider life insurance cover. When did you last look at your life insurance arrangements? Is your life insurance up to date, appropriate, and held in trust? If you or your partner has company benefits, make sure you complete a nomination form to ensure the money passes to who you want it to.

2. Do you need income protection?

This is an area that many people overlook. Have you considered protecting your income in case you are unable to work? Income protection plans can be expensive, but what would happen if you were unable to work for a time due to an accident or illness? How would you pay your mortgage and bills?

3. Get a forecast of your state pension

If you’re in the UK, visit gov.uk/browse/working/state-pension to obtain accurate, up-to-date information about your state pension: this website will tell you how much you will receive and when it will be paid. In future, you will actually have to apply for a state pension instead of your pension automatically starting when you reach retirement age. This will give you an idea of how much you will have to live on in retirement, and you can start to consider personal pensions to top up your state pension. If you’re based elsewhere, check your state pension provider for similar.

4. Check your previous pensions

If you have paid into any pensions, when did you last review their value? You may have a pot of money: is it in the right fund for the level of risk you’re happy with? How has your fund performed? Have you completed a beneficiary nomination form so that, if you die, the money will go to your partner or children? This is a complex area so it’s often best to seek expert advice from a financial advisor who specialises in pensions.

5. Make a will

Have you made a will? If so, when did you last review it? Is it still relevant? Are the executors still the people you would choose, or are they old friends who have since moved away and you’re no longer in contact? This is important: the people you choose will have to administer your will and carry out your wishes, so you must be able to trust them.

6. Safe as houses: is your mortgage the best one for you?

A house is the biggest purchase most of us will ever make, yet many people stay with the same mortgage provider for years and don’t review their mortgage. Many of these are interest-only mortgages with no form of repayment vehicle. Make sure this is not you! Mortgage companies in the UK are now writing to homeowners to check that they have a repayment vehicle in place. An ISA is the most common repayment vehicle today, but you may have an endowment if you took out your mortgage some time ago. If you want to restructure your mortgage, most lenders will insist it is done on a repayment basis (so your mortgage is repaid by the end of the mortgage term). Ask your mortgage lender for advice, or see a mortgage advisor.

7. If you can, overpay your mortgage

If you’re happy with your current mortgage deal, I strongly recommend that you take advantage of the current low interest rates and think about making monthly overpayments, however small. You will be amazed at the difference this makes to reduce the term of your mortgage. If you can afford to overpay now and get used to paying the higher rate each month, when interest rates start to go up, as they probably will, this gives you a buffer against your monthly mortgage increase. For example, imagine your mortgage is £500 per month but interest rates go up and you have to pay £600 per month. If you’re already overpaying your mortgage and paying £600 per month, you won’t notice this increase.

8. Review your income and expenditure

Once a year, make a coffee – or a pour a glass of wine – then sit down with whoever shares your financial decisions and list all your income and outgoings, to find out where all your money goes and to see whether you can make any savings anywhere. Be honest with yourself: if money is tight, is paying for Sky Sports or having a takeaway latte every day more important than paying for life insurance to protect your children should the worst happen? I advise clients to do this exercise separately then come together to compare their lists – they may look quite different!

9. Carry out an annual business review

When you’ve finished talking about your personal income and outgoings, do the same for your business. Do you know all your running costs? Without doing this, how can you quote for any work or know what you need to charge to cover your costs?

There’s more advice on this in Going Solo: Creating your freelance editorial business by Sue Littleford.

10. Shop around to get a better deal

Rather than clicking on ‘renew’ when an insurance renewal notice drops into your inbox, why not look at price comparison websites to see if you can get a better deal? Try moneysupermarket.com, comparethemarket.com or confused.com. A lot of companies give introductory discounts, so changing insurer means that you save money. The same goes for gas and electricity: check out moneysavingexpert.com/utilities/you-switch-gas-electricity/

Putting the pieces together

Financial planning is like a jigsaw. You may not have all the pieces, but the more you can collect and put in place, the prettier the picture you will make – and the better your financial future will look.

Don’t be put off if you can’t take action on all of these suggestions. Prioritise the list for your circumstances, then review it every year to see if anything has changed.

About Paul Hammett

Paul Hammett specialises in giving advice on investment and pensions, providing an all-round financial planning service to help clients meet their financial goals. He enjoys advising clients and their families over the long term, and has worked with many clients for over 20 years.

 

About the CIEP

The Chartered Institute of Editing and Proofreading (CIEP) is a non-profit body promoting excellence in English language editing. We set and demonstrate editorial standards, and we are a community, training hub and support network for editorial professionals – the people who work to make text accurate, clear and fit for purpose.

Find out more about:

 

Photo credits: coins by Nick Fewings; house by Tierra Mallorca, both on Unsplash.

Posted by Abi Saffrey, CIEP blog coordinator.

The views expressed here do not necessarily reflect those of the CIEP.