It’s not particularly pleasant to think about this question or its answer, but it is very important.

According to some new research by Legal & General, it costs an average of £31,627 to replace a Mum and £23,971 to replace a Dad.

That’s an annual cost by the way.

So should the worst happen, your Financial Plan needs to be able to cope with generating that level of income each and every year.

A lot of that cost is the result of childcare, which all parents will recognise is an expensive and time consuming activity.

It costs an average of £165 a week to raise a child, adding up to £154,440 over 18 years.

According to the Legal & General survey, Mums carry out an average of £277 a week of childcare with Dads carrying out an average of £218.

The actual cost of replacing you as a Mum or Dad will of course vary from these averages.

Spending some time working with a Financial Planner to determine the financial resources you need in place should you die is an important exercise, particularly if you have dependent children.

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Is the Credit Crunch now a distant memory?.

While we celebrate the positive returns the FTSE 100 and other global stock markets have experienced since the dark days of 2008/09, we also constantly remind clients that it is not possible to time the markets, that they can go down as well as up.

Equity investors can benefit from taking on the risk of owning part of a company in two ways; growth in the price of the shares of the companies they part own and also the payment of dividends from the companies, which vary from company to company depending on the strategy of the company and decisions made by the board.

As an investor you can choose to receive the dividend as an income or you can elect to have the proceeds used to purchase more shares in the company.

The same is true if you invest in a basket of shares via a pooled investment such as a Unit Trust or Investment Trust.

If you have chosen to receive the income, have you questioned why you are doing this?

If you don’t need the income simply electing to have the payment re-invested could make you much richer.

What is particularly interesting about the performance of the FTSE is what investors don’t always appreciate.

Research by BGC Partners, a firm of investment brokers, shows that when the payment of dividends from the companies that make up the FTSE 100 are added back in the index would actually be at 9,200 not the 6,800 it is at the time for writing.

Perennial research from the pension provider Scottish Widows also evidences this; £100 invested in 1950 in the Barclays Equity Price Index (a proxy for UK equities) would have been worth £8,584 in 2012 if the dividends were received and spent but a staggering £127,235 if dividends had been re-invested.

Of course, in reality, it is unlikely that anyone would have invested for this long but the point is that if you don’t need the dividend income re-investing could make you much wealthier.

On the other hand, as one client said to me this morning, it pays for his scuba diving holiday!

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A new study by Prudential has found that one in five people retiring in 2013 face this bleak financial outlook.

They also found that nearly a quarter of women retiring this year will rely entirely on the basic state pension as a source of income in later life.

One in seven people retiring in 2013 will have only the basic state pension as a source of retirement income.

This is currently a maximum income of £110.15 a week. Could you live on such a low income in retirement?

Even those who have made a small private pension provision face a life in retirement below the poverty line.

Prudential found that 18% of people retiring in 2013 are due to have an income of £8,254 a year, which is estimated by the Joseph Rowntree Foundation as below the poverty line for a single pensioner in the UK.

With rising living costs, making sufficient provision for an income in retirement is essential if you are to continue to enjoy a reasonable standard of living in later life.

Planning is crucial; the more time you give yourself to build sources of income for retirement, the better.

Reaching retirement with little or no income other than the basic state pension is a recipe for a financially challenging experience.

Pensions are of course not the only solution, with those who reach retirement in the best financial condition often drawing from a variety of income sources and investment assets to support their lifestyle.

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She is a very patient person (shouldn’t I be the patient?!) and diligently works her way around my teeth doing whatever it is that Dental Hygienists do, scraping and polishing.

I always feel good when I come away from my appointment and promise myself to keep up the brushing and flossing routine so that on my next visits less effort is needed on her part.

Is that the way you feel when you come away from an appointment with your Financial Planner? If not shouldn’t it be?

Your financial goals and objectives have been given the once over, hopefully with little scraping and more polishing, but you come away with a good feeling that you are on track to achieve your financial objectives.

Some research by CWC Research in association with FundsNetwork published recently suggests that most people don’t want to meet with their Financial Planner as often as we think they might.

Only 3% of people who use a Financial Planner would want to meet monthly, 5% quarterly, 25% half-yearly and 39% yearly.

25% of people would only want to meet their Financial Planner ‘when necessary’.

A further 3% would never want to meet and would do everything remotely.

We typically meet with our clients once or twice a year and that frequency supported by regular contact through our weekly email newsletter, monthly Investment Outlook and quarterly Investment Report seems to offer the best mix of face to face  meetings and remote contact.

We do of course encourage our clients to keep their financial plans as clean as their teeth because that will prevent more significant remedial work later on.

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If they do fix, for how long should they fix – one, three or five years?

The economics behind the numbers are usually quite simple; fix for longer and benefit from a higher rate of interest.

Taking a look at the most competitive rates available to UK savers from mainstream banks and building societies today, we see that instant access is paying 1.70% (including a 1.19% bonus for twelve months).

A one year fixed rate bond is paying slightly more interest, at 2.00%. Two years will get you 2.30% and three years will pay 2.45%.

All of these interest rates are of course subject to income tax. Once tax and inflation is taken into account, savers are likely to experience a real terms loss in the value of their capital, regardless of whether they opt for easy access or fixed rates.

If you are prepared to fix your savings interest rate for longer than three years, a five year bond is offering 3.00%.

I was recently quoted in the Mail on Sunday saying it would be madness to lock up your savings for five years or longer. With interest rates currently so low, there is a real chance they will go up during a five year fixed period, leaving savers with a less than competitive deal.

Our view is that most savers can benefit from fixing for a year, possibly two.

Before tying up your cash savings for this long, you might consider holding some money back as an emergency fund with easy access.

Savers also need to consider the tax implications of their savings strategies today more than ever before, in order to maximise returns.

Making use of your cash ISA allowance means your interest on cash savings within the ISA is free of income tax.

You can get 2.25% tax-free interest from the most competitive easy access cash ISA right now, beating the net interest from a three year fixed savings account for basic and higher rate taxpayers.

Fixing your cash ISA for a year only gives you 2.20%, making the easy access route more attractive. Two years gets you 2.55%, which might be worth considering if you believe interest rates are destined to stay low for at least the next couple of years.

The markets indicate interest rates will stay low until at least 2016.

With the latest Monetary Policy Committee minutes out this morning showing that Bank governor Sir Mervyn King voted again for an additional £25bn of quantitative easing, we expect interest rates to stay low for at least that long.

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Developed by Warwick University, the calculator aims to create a more realistic estimate of our own household inflation figures than the official Government measures of CPI and RPI (which includes mortgage and property related costs).

Official figures out today showed a fall in RPI from 3.3% to 2.9% and CPI from 2.8% to 2.4% compared to last month.

This is a positive for the Bank of England and their continual battle in hitting their CPI target of 2% but as we often tell our clients, official figures don’t always match personal expenditure experiences.

With this in mind I thought I would find out what the BBC and Warwick University thought my personal inflation rate would be based on my family and financial position.

Coming out at 2.9% means it is actually pretty consistent with the RPI figures (and I do still have a mortgage) but the comparison with Homer Simpson seemed pretty random.

On closer inspection they do accept that assigning financial details to a cartoon family is arbitrary and subjective but to provide a headline it is a bit of fun.

The criteria used to assess household inflation did produce confusing results however.

I live with my wife who also works, we have no children and we left full time education nearly twelve years ago but the description of the results suggests I have higher than average education costs?

Unless you keep a detailed log of you expenditure and compare it on a month by month basis it will be very hard to get an accurate picture of inflation. But how important is it?

As Chartered Financial Planners we assist our clients in determining whether they can afford to live the lifestyles they want, for the rest of their lives, without the risk of running out of money.

Analysis such as this requires planning for the long term – at least thirty years if your retire at age 60 – and therefore inflation is going to have a significant effect on the cost of your lifestyle.

To forecast this we have clients complete an expenditure questionnaire which itemises life’s different costs and how they think they will change in retirement.

We can’t predict what price inflation will be in thirty years time but we can make assumptions and we feel a long term rate of 3 – 3.5%% pa is prudent given the Bank of England target.

By applying an inflation figure to your long term finances, you can determine whether you are saving and investing enough and whether your pension pot is going to be large enough to sufficiently replace your earned income in retirement.

If it looks like you are not going to be able to live the lifestyle you wish it is better to make the necessary adjustments well before retirement when you have time to benefit from compound interest.

So whether or not your lifestyle is like Homer Simpson’s, if you would like to understand how inflation may affect your retirement please do get in touch.

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An immediate care annuity provides a regular, tax-free income to pay care fees.

Payments are made directly to your registered care provider and continue for the rest of your life.

You buy an immediate care annuity with a lump sum payment and the cost is based on your medical history and life expectancy, so full medical underwriting needs to take place to understand the cost.

The new long-term care annuity from Just Retirement will bring the total number of providers in this important market to three, alongside Friends Life and Partnership.

Just Retirement chief executive Rodney Cook said:

“I am pleased to announce Just Retirement will be entering the long term care market during the next few months, initially with an immediate needs annuity solution. Further details will be published before the launch date.”

Greater levels of competition are important in this marketplace to ensure that those at the point of entering care receive the best possible deal.

Three providers offering immediate care annuity products highlights the importance of using a specialist care fees adviser to shop around on your behalf and secure the most competitive deal.

Even with only two providers active in the market, we often find a big difference between the prices quoted from each after full medical underwriting has taken place.

With an increasingly ageing population and greater certainty over future legislation around capping care costs, we expect to see more insurers enter this important market in the near future.

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They also found that 26.7 million adults in Britain (54%) have started thinking about their financial needs, while just over a quarter (27%) of these adults have actually started to put financial plans into practice.

The latest Quarterly Savings Survey from NS&I found that 37 is the age most believe they should start considering their needs in later life.

Over a quarter of Britons (27%) who have yet to consider financial planning in later life admit they do not want to think about such events.

23% say they simply have not had time to think about their later life financial needs, and just under a fifth (19%) prefer to take a short-term view of their finances and use the money they have for the present.

A further 12% don’t consider that this situation will affect them in the near future and believe they will have plenty of time to consider such planning going forward, while 7% of Britons do not consider later life financial planning as important.

Time is critical when it comes to financial planning for requirements in later life, particularly retirement and care fees planning.

The later you leave it to start planning, the greater the challenge.

As a firm of Chartered Financial Planners which specialises in planning for later life, including care fees planning, we often find that new clients to come to us for advise have left planning very late.

Whilst product options for care fees planning ahead of the need for care are currently limited (actually, non-existent!) in the UK market, it remains important to take a holistic view of your financial plans for later life.

The more time you can give yourself to plan for your later life financial needs, the better.

Do speak to us today to get started.

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Sports stars in particular have historically been terrible with money.

This is often because they rely on unscrupulous advisers or are swayed by changing room chat, falling to peer pressure to back the latest, greatest scheme to pay less tax.

The Mail on Sunday reported yesterday that a number of celebrities have fallen victim to an alleged £125m tax fraud involving film investments.

The newspaper report listed West Ham United manager Sam Allardyce, Princess Diana’s former butler Paul Burrell and pop singers Mike Skinner of The Streets and Damon Gough, also known as Badly Drawn Boy, as victims of the alleged tax fraud.

It wasn’t only celebrities to be reeled in, but also some city professionals including Caspar Shand Kydd, nephew of Princess Diana’s stepfather Peter Shand Kydd.

Two individuals caught up with links to Princess Diana?! It’s a wonder that the Daily Express wasn’t all over this story before the Mail on Sunday…

Celebrities and professional sports people probably fall victim to these scams for many of the same reasons as any other individuals.

Greed certainly plays a role, as well as ignorance.

If an investment or tax planning scheme seems too good to be true, it usually is.

The best Financial Planning is reasonably boring. This often fails to excite those who demand higher returns, bigger rewards or significantly lower tax bills.

The best Financial Planning is also best delivered by properly authorised and regulated individuals, using regulated investment and tax planning schemes.

It would be nice to see fewer of these scams in the future, particularly as they damage the reputation of all financial advisers and often result in us paying compensation costs through our levy to fund the Financial Services Compensation Scheme (FSCS).

Better regulation from the Financial Conduct Authority (FCA), HMRC and others is one way to ensure ordinary and celebrity investors do not get scammed.

Another possibly more effective way is for investors themselves to become better educated, understand the risks and stop fuelling the scams in the first place.

An investment or tax planning scam that doesn’t attract any investor cash never becomes a scam which loses investor cash or features in the weekend press.

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Once you have purchased the annuity that decision cannot be reversed; after the cooling off period has expired you cannot change your mind.

This decision will be even more significant following the government proposals for the new state pension arrangement from April 2016.

Many people are unaware of the options available to them with regard to annuity purchase;

• Should you build in a pension for your spouse so that the income continues after your death?

• Should you include an escalation factor to keep pace with inflation or opt for the higher annuity on a level basis?

• Do you need to add in guarantees for 5 years or maybe 10 years?

• Do you take the tax free cash and a reduced pension or do you opt for the higher pension and no tax free cash?

• Are you or your spouse in poor health and would you qualify for an enhanced rate?

These are questions that many people do not consider.

There are still people who are unaware of the open market option and simply apply for the annuity quoted from their pension provider.

They do not seek advice or research the market place to get the best annuity rate for their personal situation.

From April 2016 the government is proposing changes to the current state pension. A single payment of £145 per week will be introduced.

This sounds like good news as many will no longer have to rely on means tested benefits.

However the facility for one spouse to claim the state pension based on their partner’s National Insurance contributions will be abolished.

In the past a married woman could qualify for a state pension based on her husband’s national insurance contributions. This will no longer be the case.

Everyone will qualify in their own right according to the number of National Insurance contributions they have paid.

For many married woman this could prove to be a major problem.

At the moment life expectancy is shorter for the male life then the female life and therefore a woman often outlives her husband.

If the husband opts for a single life annuity from his personal pension funds, then his widow will receive no on-going income from the annuity when her husband dies.

She will be totally dependent on any state pension she has accrued in her own right and any other pension provision she has made for herself.

Research shows that for six out of 10 married men will purchase an annuity on a single life basis. It may be that these men are desperate to get the highest income possible in retirement without fully understanding the consequences for their wife should they die prematurely.

Existing pensioners will see no change to their state pension arrangement.

They will continue to receive their pension according to the current rules, but for those who retire after April 2016 we may well start to see widows with little or no pension income in retirement if the new proposals go ahead unchanged.

The Pension Bill will have to pass through a number of Parliamentary stages and hopefully further consideration will be taken of the potential problem for widows retiring in the future.

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