Given the current uncertainty and perceived anxieties around getting clinics and business up and running once the Governments restrictions are lifted; wouldn’t you want get a firm grip of your personal finances?
I asked Mark Titley, a Financial Adviser from Willson Grange Wealth Management Limited, about what Sports Therapists can do to protect themselves moving forwards. He provided this advice…
Financial planning is very personal and everyone’s needs are different. That is why I believe it’s important to speak to a Financial Planner, such as myself, to make sure the plans you put in place are suitable.
I have focused on two areas of financial advice, Protection and Pension planning.
Life is unpredictable - the current climate goes to show we never know what is around the corner. Life Assurance or Income Protection provide peace of mind, so that you can go about your day-to-day business with peace of mind.
Let’s tackle the big one that you are probably thinking about right now… Income Protection.
Income Protection is designed to pay a regular income should you, the individual, become unable to work due to illness or incapacity. Through protecting your income, you can maintain a standard of living based upon the payments that you have made (free of income tax). Your lifestyle plays a significant part when the policy provider determines the monthly cost of a product, so having a good healthy lifestyle will ensure the monthly premium is as low as possible. It is uncertain how policies are going to be worded post-COVID19 and whether they will cover costs if a future pandemic was to occur.
If you’re self-employed, you will not have the workplace benefits that employees have such as death in service or Pension contributions. Even though it is now a requirement for employers to contribute 3% of pensionable pay into a pension, many self-employed Practitioners do not consider it until later in life often because Pensions can be seen as complex. However, by speaking with a Financial Planner and then contributing an affordable amount as early as possible, forms good habits that will have major benefits in future years.
Have you considered your Pension?
In addition to saving for retirement, there are many tax advantages to paying into a Pension. You will receive tax relief at your marginal rate; your pension pot will grow free of Income Tax and Capital Gains Tax; and you will be able to take 25% tax free cash at 55 and benefit from Inheritance Tax avoidance.
The current full state pension entitlement is £175.20 per week; to qualify you need 35 qualifying years of National Insurance payments. You can check you State Pension forecast by completing a BR19 form, which you can obtain from www.gov.uk Hint: it would be worth speaking to your accountant regarding your National Insurance. Retirement is personal, so although £8,500 might be enough for some individuals, others will prefer to maintain a standard of living they are used to. With this in mind, I believe contributing an affordable amount into a pension is very important.
For example, if a basic rate taxpayer contributed £80 per month into a Pension they would receive tax relief of 20% meaning their contribution would be £100. If they began contributing at 30 until age 55 the individual would have a pension pot of £30,000 despite only personally contributing £24,000. This is also without considering any growth within the Pension.
‘If you’re self-employed, you will not have the workplace benefits that employees have.’
Another area to consider is previous Pension policies you have previously contributed to. Have you been employed elsewhere and paid into a Pension? If so, I can look into how they are invested, charges you’re paying and if they are suitable for you.
Life Assurance is also something that you may want to consider, no matter your employment status. I would like to share how little this could cost, for the relative benefit of not worrying on a daily basis about the repercussions on your family not being able to pay the mortgage (should the worst thing happen). I recently set up a Life Assurance policy for an individual aged 32 to cover her mortgage, over a term of 35 years. This was a guaranteed premium of £7 per month, which meant that her mortgage would be paid off should the worst happen to her. I’m sure you would agree for an affordable cost of £7 per month, this is a massive weight off her mind and ensures her loved ones are protected.
‘Life Assurance is also something that you may want to consider, no matter your employment status.’
Your circumstances are constantly evolving, so I would always recommend having your policies reviewed. This may be of importance if your circumstances have recently changed as a result of the global pandemic!
As Sports Therapists, I know that this is a challenging time for you and your family. If you would like to get in contact to discuss how I could help you without any obligations to take out a policy, then please contact me. Also, when you contact me let me know that you have read this blog, so I know exactly what information you already know!