‘What should I do with my disposable income?’

Having regular disposable income each month is great - but what should you be doing with it? It essentially boils down to three very different choices: spend, secure, or save. Paul Hardy explains the lasting impact investing can have on your long term financial health.

Regular disposable income is a wonderful reward for a job well done - especially in the current economic climate. However, while it may be tempting to spend frivolously, having additional funds at your fingertips gives you the option to secure your own financial situation in the short term. 

More than this, it also presents the chance to build a plan for longer-term financial well-being; the latter is especially important, as it also impacts the people closest to you. 

These will, of course, vary for everyone, but it comes down to understanding your current financial situation and your goals. These are likely to be influenced heavily by your age and circumstances, such as:

Age 13-17, teenagers learning the basics

– Low level of financial income

As children, we typically save for hobbies and interests. This helps to learn the importance of money in an environment in which we are supported financially by parents or guardians. If you have children under the age of 17, I’d advise you to explore setting them up with a Children’s Individual Savings Account, or standard children savings accounts.

Age 18-25, young adults aspiring for more

– Entering the workforce

At this age, you’re probably starting to think more proactively about work and careers, all the while becoming more independent and laying the groundwork for your future aspirations. While spending is more fun than saving, those with foresight may consider investing early to save for a house deposit, and it’s never too early to start saving for retirement. You should be aware of how powerful pensions are and how employers can start to provide a key long-term savings plan for them. If you’re between 18-25, I’d suggest investing your disposable income in a Help to Buy ISA, Lifetime ISA or your pension.

Age 26-45, securing your family and foundations

 – Family career building

By this age, most of us will have savings goals that hinge around supporting our financial well-being while providing for dependants. In this stage of life, it pays to invest your regular disposable income into key concerns such as mortgages, life insurance & protection, pensions (children and adults) and savings, not forgetting contingency savings (i.e. your ‘rainy day’ fund).

Age 45-64, approaching pre-retirement

– Pre-retirement

By now, most of us will typically be earning higher wages through experience, looking to grow our money as best we can and/or securing enough assets to provide for retirement. While having a financial adviser is always a good decision, at this time it can become critical for ensuring you have the funds you need to live comfortably and well as you draw closer to retirement. If you’re approaching retirement, the most pertinent places to invest your disposable income is in your pension, life insurance & protection, by gifting it to children or intelligent tax planning to maximise your take-home pay.

65+, entering retirement and later retirement

– Living comfortably and enjoying life

Before and indeed during retirement, it’s vital to look carefully at your overall wealth to see how much money you have. This enables you to match it to the lifestyle that you anticipate having, and make any necessary adjustments.

It could also be that passing on your wealth is important to you, which is a natural concern when it comes to asset and estate planning. At this stage in life, any surplus income can be best used for consolidating different funds into a larger, self-contained (invested) pension pots, gifting it to family or further retirement planning. Special attention should be paid to Inheritance Tax Mitigation as well as Wills & Power of Attorney.

Wealth initiation, consolidation and fulfilment

Whatever stage of life you’re at - whether you’re looking to build wealth, consolidate assets or enjoy living comfortably well into your retirement - sound financial guidance should always be customised specifically to you and your circumstances. 

The importance of informed financial advice is really two-fold: 

  1.  It ensures that the advice and products you’re exploring are suitable to achieve your intended goal; 
  2. It builds a financial plan which creates a relationship with a trusted specialist in the knowledge that their financial well-being is being looked after over time.

You may not be aware of the fantastic opportunity that you currently have to build your wealth and secure your financial wellbeing into retirement. 

Get in touch with our award-winning team of financial planners today to begin exploring the building blocks to help support your future.


The questions about pensions you’re too embarrassed to ask

The questions about pensions you’re too embarrassed to ask

We all diligently pay into our pensions throughout our working lives, but many of us have unspoken assumptions or seemingly silly questions that go unanswered. Not to worry; Paul Hardy explains all the questions about your pension you’ve always wanted to know but might be too embarrassed to ask.

The questions about pensions you’re too embarrassed to ask

How much do I actually have in my pension?

There’s no shame in admitting that you’re not sure what money you have available - or where exactly it might be.

If you’ve changed jobs, you’ll probably have multiple pension pots so you might not know how much you have all together, not to mention how much you may have by the time you retire.

Sitting down with a financial adviser to go over the different funds you’ll have access to, and consolidating them into one pot will give you a much clearer picture of how much you have saved.

One particularly useful thing you can do before speaking to your financial adviser is to check your state pension forecast. Here, you’ll be able to see your contributions so far and pay off any contributions that you may have missed to ensure you receive the maximum amount payable to you when you come to retirement age.

I don’t like taking risks; how does investing work?

When it comes to investing, nothing is without an element of risk. 

However, almost everything in life has risk too - from crossing the road to cooking a meal - the important thing is doing what you can to minimise the risk and making a judgement on how the likely benefits outweigh it.

Ultimately, although there is a risk of burning your fingers, cooking a meal is much better than eating raw ingredients so, if you know what you’re doing, it’s well worth it.

There are different levels of risk when it comes to investment and, while there is never a guaranteed return, it’s important to take care to discuss what level of risk you’d be comfortable with to yield the best results for you and your specific circumstances.

Am I wealthy enough to have a financial adviser?

This is an understandable concern for people who are worried about their income and how to effectively manage their expenditure as efficiently as possible. I would argue that a knowledgeable and tactful financial adviser can yield a much greater saving than any cost you might incur, so in this sense it can pay dividends to discuss your finances with an expert. 

From tax-efficient ways to grow your savings while minimising your liability for National Insurance through to exploring the host of options available to you for investing your funds to help them grow organically, you don’t need to be rich to have a financial adviser - but you’ll likely find yourself better off for having one in your corner.

Will I ever be able to retire?

This is probably the number one concern that people skirt their way around - but of course, we all want an answer to this burning question.

The short answer is ‘yes’. The longer answer is that the age at which you’ll be able to retire depends heavily on your regular income, expenditure and how shrewd you’ve been when it comes to saving and investing. 

My colleague Paul has just explored this topic in detail, so read his recent blog ‘when can I retire?’ to find out more.

If you’re curious about investing and want to know how you can maximise your pension pot ahead of retirement, get in touch with our expert team today.


Break out of cage

When can I retire? Expert insight on when you can draw your pension

There are more retirees in the UK than ever and with people living for longer, more of us are wondering about our retirement plans. But at what age (and with what resources) you retire is largely down to your investment choices, Paul Hardy explains. 

When can I retire? Expert insight on when you can draw your pension - Matthew Douglas Ltd

Of course, circumstances can and do change, so we advise regular reviews of your pension with a dedicated financial adviser to ensure sufficient spending in your twilight years. 

Protect your income to prevent problems later on

Income Protection Insurance can be a vital lifeline for many people. For example, for around £60 a month (depending on your income and your provider) you’ll be able to ensure your salary isn’t compromised by illness or injury. This can guarantee you’re contributing to your pension for as long as you’re working and means you’re not eroding your savings early. 

To put it in perspective, that is around 2% of most people’s monthly spend, so the savings could be sizable for a very small investment.

How much money do I need to retire?

On average, a single person will need £23,300 a year to achieve a moderate living standard in retirement and £37,300 for a comfortable one. Of course, this varies per person, by living location and any number of contributing factors. 

While we can theorise all we like, the only true way to know how much money you’ll need to retire and, consequently, at what age you can confidently leave the workforce very much depends on shrewd investments and correct choices now.

Of course, circumstances can and do change, so we advise regular reviews of your pension with a dedicated financial adviser to ensure sufficient spending in your twilight years. 

Protect your income to prevent problems later on

Income Protection Insurance can be a vital lifeline for many people. For example, for around £60 a month (depending on your income and your provider) you’ll be able to ensure your salary isn’t compromised by illness or injury. This can guarantee you’re contributing to your pension for as long as you’re working and means you’re not eroding your savings early. 

To put it in perspective, that is around 2% of most people’s monthly spend, so the savings could be sizeable for a very small investment.

How much money do I need to retire?

On average, a single person will need £23,300 a year to achieve a moderate living standard in retirement and £37,300 for a comfortable one. Of course, this varies per person, by living location and any number of contributing factors. 

While we can theorise all we like, the only true way to know how much money you’ll need to retire and, consequently, at what age you can confidently leave the workforce very much depends on shrewd investments and correct choices now.

At Matthew Douglas, our team of retirement planning experts are here to help you ensure your pension and savings are right for you. Get in touch today to plan ahead of potential problems.


Growing money

Should you set up a private pension?

With the cost of living increasing, many people are finding that state and workplace pensions are not enough to fund the retirement lifestyle they want. Setting up a private pension gives you greater flexibility and freedom around your retirement, as Paul Hardy explains.

Should you set up a private pension? Matthew Douglas

What is a private pension?

A private pension is a personal pension that you set up to save for retirement independently from your workplace pension scheme. 

Typically, private pensions are defined contribution schemes, which means you put money into a pot which is invested, and your retirement income is determined by your contributions and the investment growth. 

Unlike a workplace pension that might lock you into fixed monthly payments, private pensions grant you the freedom to pay in regularly or via less frequent lump sum payments. Similarly to workplace pensions however, private pensions are eligible for tax relief.

Should you set up a private pension? 

Adding a private pension to your financial portfolio is advisable for various reasons. It provides diversification beyond your workplace pension, allowing for a more personalised approach to achieving your financial goals. 

Unlike standard workplace pensions, private pensions often come with the option of receiving guidance from a financial adviser; a valuable resource for making informed investment decisions.

While retaining your workplace pension is important, as opting out could lead to your employer no longer contributing, many employers allow you to set up a private pension alongside your existing one. 

This flexibility is particularly beneficial for those juggling multiple workplace pensions, offering the opportunity to consolidate and manage old, dormant pensions in a new private pension account.

What are the benefits of a private pension?

A key advantage of private pensions is the expert management of your investments, ensuring your money works harder for you. 

A private pension also provides clear insights into your retirement finances, addressing uncertainties about when and how to retire. This clarity on what you’ll receive in retirement serves as a foundation for future financial decisions, especially when you change jobs. 

At Matthew Douglas, our team of retirement planning experts are here to help you ensure your pension is right for you. Get in touch with us to discuss your options.


Multi Generation Family In Sand Dunes On Winter Beach

How to invest after retirement

Ensure your wealth is preserved for future generations

As you enter your golden years, the excitement of finally retiring may be tinged with some uncertainty. With the working days behind you, it’s natural to wonder if you’ve amassed sufficient resources and how best to utilise them. 

Additionally, life can be unpredictable, so it’s essential to be prepared for unforeseen circumstances. Investing for income after retirement can seem a daunting task, but it is by no means impossible. With professional advice, careful planning and continuous monitoring of your investments, you can ensure that your savings last as long as needed.

To help you navigate this new chapter, here are some tips on investing after retirement to ensure your hard-earned savings continue to support you throughout your well-deserved rest.

Keep an eye on inflation
When it comes to investing after retirement, inflation should always be taken into account. Inflation reduces the purchasing power of money over time, so it’s essential to consider this when making investment decisions. Investing in products such as index-linked annuities or government bonds can help protect against inflation risk and provide consistent income over the long term.

Consider different asset classes
Investing in different asset classes can help diversify your portfolio and minimise risk. This could include equities, fixed income (such as bonds), property, cash or alternative assets. Different asset classes have varying levels of risk and returns, so it’s essential to understand the risks associated with each before investing.

Don’t forget about taxes
Taxation rules change regularly, so it’s crucial to ensure you are up-to-date on the latest regulations to take advantage of potential tax breaks or benefits when investing after retirement.

Key points to consider

Income Tax: Depending on your total income, including pensions, investments, and other sources, you may be liable to pay Income Tax. Keep track of your personal allowance, which is the income you can earn before paying Income Tax.

Capital Gains Tax (CGT): When you sell an investment or asset that has appreciated in value, you may be subject to CGT. However, there is an annual tax-free allowance for capital gains, so ensure you know the current threshold.

Dividend Tax: If you receive dividends from investments in shares, you’ll need to consider dividend tax. There’s a tax-free dividend allowance, but any dividends above this threshold will be taxed.

Inheritance Tax (IHT): Proper estate planning can help minimise the impact of IHT on your loved ones. Make sure to understand the current IHT threshold and consider strategies such as gifting assets or setting up trusts to reduce potential tax liabilities.

Pension Contributions: Even after retirement, you can still contribute to your pension and potentially receive tax relief on those contributions. This can be an effective way to grow your pension savings while reducing your overall tax liability.

Individual Savings Accounts (ISAs): Utilising ISAs allows you to invest in equities, bonds, and other assets without being subject to Income Tax or CGT on the returns. Maximise your annual ISA allowance to take advantage of these tax benefits.

Rebalance your portfolio regularly
Once you have created a well-diversified portfolio, reviewing and rebalancing it regularly is essential. This will help ensure that it remains aligned with your goals and the risk profile you are comfortable with.

A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS THE PLAN HAS A PROTECTED PENSION AGE).

THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.

YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS..


Hispanic middle age couple at home, woman using laptop looking away to side with smile on face,

More people are opting for semi-retirement, here's why


Two in five over-55s plan to gradually phase out working life before State Pension age

Semi-retirement is an option to consider for individuals who may not be ready to fully retire, but still wish to reduce their work hours and gradually phase out working life. By choosing to semi-retire, you can maintain a good work-life balance while still earning an income.

Many people choose to semi-retire as it allows them to enjoy their hobbies, travel and spend more time with their loved ones. This option also provides a smooth transition into retirement, enabling you to adjust and focus on what truly matters in life.

Changing attitudes towards employment
A recent study has identified that more than two in five (44%) 55-64-year-olds plan to move into ‘semi-retirement’ before they reach 65, allowing them to draw on their pension savings while continuing to work part-time[1].

The study investigated changing attitudes towards employment and retirement as a result of the Covid-19 outbreak. The findings highlighted people’s shifting emotional and financial wellbeing as they deal with post-pandemic job insecurity.

Continuing to work through retirement
More than nine in ten (91%) people said they were ‘much happier’ after reducing their working hours, implying that semi- or partial retirement – ‘part-tirement’ – could be the solution for more than half (55%) of workers who like the idea of continuing to work through retirement, giving them freedom in later life while remaining part of the workforce.

Retirement can account for up to a third of an individual’s life as life expectancy continues to rise and more individuals than ever are surviving to age 100 and beyond. Recent changes in government policy, such as the increase in the State Pension age to 67 in 2028, have caused people of all ages to reconsider their plans for work and retirement.

Flexible strategy to working later in life
Over three-quarters of 18-34-year-olds, or 59%, say they intend to semi-retire before the age of 65, rising to 61% of those aged 35-44. The findings show that longer working lives are prompting younger people to consider a flexible strategy to working later in life in order to keep their career.
According to recent ONS data, 48,000 over-50s have lately returned to the workforce, as Chancellor Jeremy Hunt encourages people who have retired or are considering retirement to pursue part-time or full-time work to help alleviate some of the UK’s labour shortage challenges.

Help improve mental and physical health
But the study indicates that people prefer to work past the age of retirement, implying that the UK’s workplace participation problems would not just be solved by encouraging people to return to work. Four in five, or 80%, of those over the age of 65 said they enjoyed the notion of working into retirement, with at least two in five, or 41%, of other age groups, agreeing.

Continuing to work can help improve mental and physical health, which informs overall wellbeing, and it can also keep loneliness and isolation at bay. The urge to retire early is frequently motivated by persons seeking more independence while being physically strong and healthy enough to enjoy it.

Semi-retirement can be a win-win situation
The study shows that semi-retirement can be a win-win situation for both employers and employees, as companies gain from preserving the skills and knowledge of skilled workers in the workforce, while workers can make decisions about maintaining a healthy lifestyle and income in retirement.

In a climate where longer working lives are becoming the norm, semi-retirement is a chance to experience the ‘best of both’, which can benefit both employees and employers. Retaining connection to the workplace is an appealing option for many people who are still working towards their financial goals or are simply not ready to stop working.

Make a big, positive difference in the long term
It also provides an opportunity for employers to continue to harness the knowledge and expertise of more experienced staff for longer. As people live longer, investing time in ourselves and considering every option available in later life is the best way to ensure we have the retirement we aspire to. Starting to think and plan further ahead is a small step that can make a big, positive difference in the long term.

The study clearly identifies that semi-retirement looks set to continue to be a popular option for many retirees, and for good reason. Whether you choose to work part-time for financial reasons or simply because you enjoy it, semi-retirement can be a great option for anyone looking to make the most of their retirement years.

Source data:
[1] Research among 2,000 UK employees working in organisations with over 1,000 employees was conducted independently on behalf of Aviva by Quadrangle in February 2020, August 2020, March 2021 and June 2022. Not all figures add up to 100% as figures have been rounded throughout the report.

A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS PLAN HAS A PROTECTED PENSION AGE).

THE VALUE OF YOUR INVESTMENTS(AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP, WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE.

YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.