How to beat the system with an annuity
The answer unfortunately is quite simple – live to 116!
The Daily Telegraph worked out that if Jiroemon Kimura, the world’s oldest man who died at the age of 116 in June, had taken out an annuity when he retired, he would have got back £2.1 million from an inflation-linked annuity. However, he would have only paid £460,000 for the annuity.
That shows how well you do when you ‘beat the actuaries’ – but most of us won’t, or not by enough to match Mr Kimura. The actuaries now say someone aged 65 today will live to age 86. Too often we still meet people at retirement who refuse to concede that they will live that long in retirement. Failing to do so risks a real shortfall in income, spending power or both.
As the Daily Telegraph says, the new pattern for a lot of people is for a retirement pension to be topped up with part-time work. Like Mr Kimura, who went on helping on his son’s farm up to the age of 90.
For those that want to maximise their income and choices when they want to stop working we offer the 44 Financial Annuity Service. It’s like sat-nav for your retirement. We’ll guide you through the pensions maze and make sure you make the best decisions for your circumstances. Call us on 0116 380 0133 for an initial chat – at our expense.
Steve Clark
Shale gas–boom or bust?
The news that Centrica, the owner of British Gas, has committed £160 million to shale gas exploration in Lancashire led to debates about a possible shale gas boom in the UK to match that in the US.
In America the boom in shale gas production has led to a sharp fall in gas prices and a massive drop in oil imports, with the US predicted to become self-sufficient in energy within a few years, only a decade after being the world’s biggest oil importer.
Early estimates are that UK resources could equal 100 years of current consumption, but experts warn that extracting gas in the UK will be much harder in the heavily-populated UK than in America’s wide empty spaces.
The UK’s reliance on expensive imported gas has resulted in soaring domestic energy bills, so we can expect to hear a lot more about the shale gas opportunity.
Apples, pears and pensions on divorce
Those very nice legal people at Rawlinson Butler LLP down in Sussex have written a really good article touching on some of the issues around pensions and divorce.
Have a read here. It’s short and sweet and sums up some of the issues really well.
Steve Clark
And the winner is–Inflation!
According to the Daily Mail, there now isn’t a single savings account in the UK that pays interest above the rate of inflation. 
With the inflation rate as measured by the Consumer Price Index up from 2.4% to 2.7%, the best easy-access account the Mail could find is an ISA paying 2.3%. Savers who are basic rate taxpayers would need to get 3.38% before tax to match the inflation rate while higher rate taxpayers would need 4.5%.
With the top non-ISA account paying 1.7% gross, a saver putting in £1,000 would see their spending power decline to £986 after 12 months even after banking their interest. But the cuts go on – National Savings & Investments announced it was cutting the rate payable on its own ISA from 2.25% to 1.75% in September.
These are tough times for savers, who need to consider alternatives to standard savings accounts if they need a higher income.
Steve Clark
Parents need to do their homework on fees!
Parents need to swot up on all the possible ways of meeting the costs of private education, says the Independent.
While as many as a third of all pupils get some financial help through bursaries, most parents will need to use every trick in the book to meet the costs – among them using tax breaks on ISAs, saving in advance and tapping up the grandparents.
When you go through the costs, buying an expensive house in the catchment area of a good state school seems a relatively low-cost alternative.
Steve Clark