The secret of happiness
What is the secret of happiness? The answer may be elusive, but recent research from Aviva suggests that the older we get the happier we become. A survey of 5,000 adults asked a wide range of questions about health, relationships, finances, work and leisure time. These insights were combined to create a ‘happiness index’, on a scale of one to ten. Positively all ages report themselves to be ‘net happy’, with a score above 5. The ‘happiest’ were those aged 75 and over, with a score of 7.15, closely followed by those aged 65 to 74. The toughest decade appears to be our 40s, reporting a score of just 5.55.
Almost two-thirds of all retirees reported their experience of retirement to be better than they had expected. When comparing the retired against the non-retired, the retired reported themselves to be more in control of their lives, more fulfilled in life, more satisfied with their finances, and more content with their general health.
So what’s the secret? For everyone it is different, but one clear insight was the power of advance planning. Those who took time to plan their lives well before retirement reported significantly greater levels of contentment than those who did not. With this in mind, it was concerning to note that nearly half of those in their 40s and 50s had not yet started to plan.
Life will raise challenges and surprises for all of us. It comes with no guarantee, but by planning today for our tomorrow, it looks like we have a greater chance of achieving contentment in later life.
If you’d like to find out more, you can read the full Aviva Voice of New Retirement report.
Our confidence, savings and working lives are on the up
With continuing conflicts in many corners of the world, tragic events of international terrorism and volatility in the global stock markets, it would be understandable for levels of uncertainty to be on the rise. But despite all of this, recent research from Aviva has found that levels of confidence in the economy have risen amongst UK employers and employees over the past three years. While far from universal, 81% of employers carry positive or neutral confidence in the economy. For employees, the figure is 64%.
A major change in the workplace over recent years has been the introduction of automatic enrolment – a guaranteed workplace pension for all eligible employees. Since 2012, 6 million workers have been enrolled into workplace pensions. A majority of employers and employees continue to support the system, and encouragingly Aviva reported that 50% of workers aged 24 to 34 are now saving into a pension for the first time in their lives.
Saving more is one response to our longer lives, and the above gives positive evidence that we are making progress. Another response is working longer. The research shows that attitudes in this area are also shifting. A third of people aged 50 who are employed in the private sector are now planning to retire at a later date than they were a decade ago. For some, this change in plans has been driven by financial needs. But for a sizeable minority, there is the belief that they still have a lot to give, coupled with a continued satisfaction derived from working. While employees’ attitudes are moving, perhaps employers still have to catch up. Less than half reported having plans in place to deal with changing retirement patterns.
Want to know more about this? You can read the full Aviva Working Lives report.
If you could be a superhero …
Is it a bird, is it a plane? No, it’s a new online quiz from Aviva which helps you discover what kind of ‘savings superhero’ you are...
Research of over 5,000 UK adults has identified ten saving personality characteristics – from ‘Turbo Savers’ who take responsibility for their finances and reap the rewards, to the ‘Daydream Believers’ who have a “Life’s too short to worry” attitude.
At a time when nearly one in five Brits “feel clueless” when asked about their saving habits, the quick quiz will identify your superhero characteristic and give hints and tips about what to do to develop your superpowers! It’s quick and it’s fun – but it could take you to infinity, and beyond.
Time to find out your secret identity: take the quiz!
The March Budget – Hello Lisa
On 16 March, George Osborne delivered his eighth Budget since becoming Chancellor of the Exchequer in 2010. In advance of the European Referendum, and with a reluctance to ruffle too many feathers, there was expectation that it would be a relatively quiet Budget.
News of challenging global economic ‘headwinds’ and the introduction of a new ‘sugary drinks tax’ stole many of the early headlines, but these were soon overtaken by events and the resignation of Iain Duncan-Smith, the Secretary of State for Work and Pensions. He voiced disagreement about some of the decisions being made by the Chancellor.
Outside this political hothouse there were also changes for our savings landscape. We’ll be able to save more in our ISAs; income tax bands are shifting; and a new product is coming our way – called the Lifetime Individual Savings Account, or LISA.
The LISA will not be available until April 2017. It’s designed for people aged under 40, with the intention of helping them to save for a first house or for retirement.
- Up to £4,000 can be saved into a LISA each year, if opened before the age of 40.
- For every £1 saved in a LISA, the government will add a 25p bonus.
- So, if an eligible saver puts in the maximum £4,000 in one year, the government will add a £1,000 bonus on top – up to the age of 50.
There are restrictions on how the saver will be able to access their LISA money. If it’s used to help purchase a first house or used to fund retirement from the age of 60, there will be no charge. In any other cases of withdrawal, the government will take back any bonus it has added, and there will be a 5% exit charge. Full details for any new LISAs will be made clearer when they become available from April 2017.
It has to be helpful to have a new savings option on the table, albeit one which only applies to those under the age of 40. For many, however, their workplace pension will continue to be a very attractive option. It also provides access to a government bonus, in the form of tax relief, and it uniquely benefits from an additional employer contribution.
As with any financial decisions, it makes good sense to consider your objectives and your options before taking action. You can read our full Budget summary to find out more about the Chancellor’s announcements.
What’s in your shopping basket?
Like all of us, the government’s Office for National Statistics (ONS) maintains its own shopping basket. It’s a big basket, containing over 700 items, and is used to monitor changes in prices and to calculate inflation. Each year the ONS reviews the contents of its basket to check it is still representative of our lives today. It’s always interesting to see what gets added and what gets removed.
Being added to the basket this year are coffee pods, downloaded computer games, women’s leggings and lemons. For clarity, there has been no rush in lemon sales particularly, but the ONS felt it should increase its representation of citrus fruits.
Items being removed include CD Roms and DVD writers (as people increasingly download content), organic carrots and dessert apples (as organic and non-organic prices are increasingly collected as one), and nightclub entries (as the number of nightclubs continues to decline).
All this suggests good news for those who like to drink coffee while wearing women’s leggings. Less so for those who like to boogie!
The pension freedoms – one year on
April 2016 marks the first anniversary of the radical pension freedoms which give most pension savers much greater freedom in what they can do with their money from the age of 55. Early insight into savers’ behaviour is encouraging.
If you need a quick reminder of what’s changed, you can watch our short video about the freedoms.
The Association of British Insurers has recently published figures to show how savers have responded to these changes.
- Of those who have chosen to act over the past year, 213,000 cash lump sums have been withdrawn. But it’s worth noting that these have tended to be people with smaller pots of money, averaging just under £15,000.
- Of those with larger pots who have chosen to act, there has been an equal balance of people investing in annuities – which guarantee an income for the rest of your life – and those investing in drawdown products – which permit flexible withdrawals from your pension pot. Around 60,000 have invested in each over the past year.
There was some concern that the freedoms would result in people spending all their retirement savings as soon as they could. As many – including Aviva – argued, the evidence so far appears to demonstrate that sensible actions are being taken and people can be trusted with their own money.