As the year progresses, there are some important changes and tips around managing your money, whether you’re saving for the future, planning for retirement, or thinking about passing on your wealth.
Here’s a simple breakdown of what you need to know to make the most of your finances this year.
1. Why You Need a Will (and Why Most People Don’t Have One)
Shockingly, over half of UK adults still don’t have a will, and many think they don’t need one because they believe they don’t have enough assets, or that they have plenty of time to make one. But having a will is crucial to ensure that your wishes are followed, your family avoids unnecessary stress, and your estate is divided as you intend. Updating your will after major life events, like getting divorced or having children, is equally important.
2. Sticking with Your Investments Pays Off
The idea of pulling your money out of the stock market when things look uncertain is tempting. But the truth is that staying invested over the long haul usually leads to better returns. Trying to time the market is risky, and even professionals struggle with it. By holding onto your investments, especially if you have a diverse portfolio, you’re more likely to see growth. Diversification spreads your risk, meaning when one part of your investments dips, another might rise to balance things out.
3. Preparing for Care Costs in Later Life
One of the biggest financial surprises for many is how expensive care in later life can be. In England, you currently need to pay for your care if you have more than £23,250 in assets. From 2025, a proposed £86,000 cap on personal care costs will help, but you’ll still need to cover living expenses like accommodation. Planning early and looking into financial options, such as annuities or tax-efficient savings, can make a huge difference.
4. Changes to ISAs in 2024: More Flexibility for Savers
If you use Individual Savings Accounts (ISAs), this year brings good news. You can now open more than one type of ISA in a tax year, as long as you don’t exceed the £20,000 limit. This gives savers and investors more flexibility. There’s also talk of a new ‘British ISA,’ aimed at encouraging investments in UK companies, though it’s still under discussion.
5. Maximizing Your Pension Savings This Year
The start of the new tax year is a great time to review your pension. Contributing early means your money has more time to grow, thanks to compound interest. You can contribute up to £60,000 or 100% of your income each year, whichever is lower. Even if you’re not working, you can still put in up to £3,600. Taking advantage of tax reliefs and employer matching schemes can significantly boost your retirement pot, so don’t wait until the last minute to act.
6. How to Avoid Inheritance Tax Pitfalls
Inheritance Tax (IHT) can eat up a large chunk of what you leave behind, especially with the threshold frozen until 2028. There are smart ways to minimize your IHT liability, like gifting excess income during your lifetime, using trusts, or even taking out life insurance policies within a trust to cover the tax bill. Planning ahead ensures that more of your wealth goes to your loved ones instead of the taxman.
7. The ‘Unretirement’ Trend: Why People Are Going Back to Work
With rising living costs, more people aged 55 and over are having to return to work because their pensions aren’t stretching as far as they’d hoped. This is called “unretirement,” and in many cases it’s about inflation and money, although not always. To avoid this situation, it’s essential to plan your pension carefully and consider topping it up whenever possible, like when you get a bonus at work.
8. Lost Pension Pots: Are Your Retirement Savings at Risk?
There’s an estimated £50 billion in lost pension pots across the UK. With people changing jobs more frequently, it’s easy to lose track of old pensions. If you’ve worked at multiple places, it’s worth checking to see if you have any forgotten pension savings. Consolidating them can help you keep on top of things and ensure you get the most from your retirement savings.
In summary, 2024 is a year full of opportunities for those willing to take control of their financial future. From updating wills and staying invested for the long term, to making the most of new ISA rules and planning for retirement, there are many ways to secure your financial well-being. There is still time to implement and benefit from plans. And as always, seeking professional advice can help you navigate these decisions with confidence.
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This article is for informational purposes only and should not be considered tax or legal advice. Tax implications vary based on individual circumstances and may change over time. For specific advice, please consult a professional.
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