Can You be a Stay-at-Home Mum and Build a Decent Pension?

How to be a mum and still get a decent pension
The findings of a childcare survey conducted recently made pretty bleak reading for most of the families all across UK.

As per the research that took place, most of the parents shell out more than £6000 per year on childcare-this is double the money that they tend to spend on food and drink-with some of the families spending around 45% of their disposable wages on childcare expenses.

As a result, most of the parents, specifically mums halt their career in order to take care of their kids. This can in turn have huge financial repercussions on them, especially when it comes down to pension.

Also, savings cannot just be on the agenda, because they aren’t really getting any income. So, if you’ve lately quit a job and become a “stay-at-home” mum, then you need to ask yourself this: “How will I build up a decent pension, whilst being a stay-at-home mum?”

Of course, the outcome of quitting a job would come with a lot of fear regarding you and your kids’ future, yet you should not give up your hopes so easily.

If you are a stay-at-home mum who is reading this article, then we must tell you that you have landed in the right place. Here we have mentioned our top tips through which you can build a better retirement.

Protect your State Pension

The full state pension enables you to £8,296 every year and whilst this alone is not likely to be enough for you to live on, it could certainly be a better foundation for your retirement.

However, in order to receive this entire amount you will have to have paid National Insurance (NI) contributions at least for a minimum of 35 years.

Now, you may perhaps associate the National Insurance contributions with working (let us tell you that in a workplace if the contributions are not paid, then auto-enrolment penalty is issued on the employer), but do you even know that all the years spent away from your workplace could still meet the criteria towards the state pension? All you need is to be registered for Child Benefit.

Basically, Child Benefit is a type of payment that you can claim, especially if you are looking after a kid below 16 to 20 years of age, who is presently undergoing education or training. Even though if you or your spouse’s individual salary is more than £50,000, you might have to pay a certain amount of tax charge.
If this is the case and you do not really want to claim Child Benefit as a result, you can fill in the form anyway as it would protect your National Insurance credits.

Not to mention, you will also receive your National Insurance credits when you’ll make a claim for Child Benefit until your youngest child has turned 12. Although it might not solve everything, but protecting your state pension could be one of the best places to start with.

Look for any Lost Pots

It has been estimated that in excess of £400m has been “lost” in pension pots, which most of the individuals have forgotten about. So, it’s better to think back to where all you have worked in the past and start contacting those old employers or pension lenders.

Through some of the surveys that were conducted in the last year, it was revealed that approximately £40,000 was found in dormant workplace pensions.

So, why don’t you start tracking down all your old pensions too? You may be taken aback at what you’ll possibly discover. This way, it will also help you when it comes down to the next step.

Set a Savings Goal

Once you know what you actually want, it is time to begin with your future planning. There are a lot of pension figures bandied about- plenty of them might possibly give you cause for panic. Yet, if you are simply going after a comfortable retirement, then the numbers may not be that bad as to what you think of it.

As per some of the expert’s survey, an average of retired couple requires around £18,000 per year in order to cover their household expenses, such as utilities, food, housing expenses and transport. All these expenses have been increasing to £26,000, thereby allowing for additional stuff, like holiday and leisure activities.

Per person this is not too massive; it’s just £13,000 per year. So, if you are eligible to a full new state pension of £8,296 a year, then as per the research conducted you only require supplementing it with roughly £5,000 every year. Of course, that is not at all a small figure, but you can certainly reach it.

Combine and Contribute whenever You Can

The research that was conducted by some of the experts is done on the basis of attaining a cash pot of £210,000 so as to sit besides your state pension. Also, they have handily broken down how couples can reach this, on the basis of which age they begin with their savings. Some of the figures are mentioned below:

  • £131 per month from the age of 20
  • £198 per month from the age of 30
  • £338 per month from the age of 40
  • £633 per month from the age of 50

You need to bear in mind that all the above mentioned figures are on the basis of starting right from scratch. So, of you have got a lot of old pension pots, then these figures could be way too small for you. But, you can still try doing a few sums and find out how you can reach that £210,000 figure.

Other thing that is worth taking into consideration is getting all the old pensions together, in one “easy to access” personal plan. In this way, you get the liberty to contribute whenever it is affordable for you, not only that, it can even spare you from these hefty fees. Surprisingly, some of the lenders still entail all sorts of expenses even on dormant pensions.

Whenever it comes down to contributing, you ought to try seeing where you can trim down the expenses, as you maybe surprised to see what certain small sacrifices could do. In addition to this, if you ever come across some money-via legacy, perhaps- you can consider putting some of it towards your pension. Also, explore what kind of work you can do around your kids too, as you may be astounded with what is possible.

Above all else, do not panic; simply keep on saving whatever you can, because as it is said “something is better than nothing”. Additionally, bear in mind that every basic rate taxpayer has their own contribution into a pension boosted by 25%, thanks to tax relief. Put simply, it means that for every £100 that you contribute you will receive another £25 from your taxman.


The Need for Checking Financial Strength Ratings Before Purchasing Life Insurance

life insurance ratings

There is an almost overwhelming set of decisions to make when shopping for life insurance, the type, length, death benefit, and beneficiary. When you throw in various riders and endorsement options is it any wonder that many consumers fail to really think about the exact life insurance company that they choose? But how should you – the consumer decide which life insurance company to trust? Do you base your decision off of the ads and marketing? Or should you focus on word of mouth or the captive life insurance agent that you met at the Elks Club?

But there is a better way – In the ideal world you would first consider the overall financial health of a given insurer. But how do you do that?

About Life Insurance Ratings

There are numerous ways to rate life insurance companies, from surveys done by JD Power to your state Insurance Regulators. However the type of life insurance rating that may be most important is called the Financial Strength Rating. A Financial Strength Rating is an “opinion” written by a credit rating agency about a given insurers ability to meet its claims and ongoing obligations. Financial Strength Ratings are slightly different than Credit Ratings as they take into account policies and claims. Financial Strength Ratings, sometimes abbreviated FSRs, are created by the big three credit rating agencies: Standard and Poor’s, Fitch, Moodys, and insurance rating specialist AM Best.

Why Consumers Should Check Life Insurance Ratings

Consumers should check financial strength ratings to help them assess if the proposed life insurance company will be able to pay out insurance claims in the future. Companies with a lower financial strength rating have a higher chance of either falling into a state regulator’s control or becoming insolvent. Insurers that have a higher financial strength rating correspondingly would have a lower chance of becoming insolvent or other. Consumers benefit from buying life insurance from higher rated carriers because it will potentially allow them to circumvent poorly run insurance conglomerates and be more assured of receiving the agreed upon pay out in the event of a payable claim.

The need to check financial strength ratings is potentially highest with life and annuities because clients will often keep a these types of insurance products for 20+ years. In the case of whole and universal life some clients will end up keeping their life insurer for their entire life. Therefore taking a little extra time to fully understand the financial trajectory can pay huge dividends down the road.

How to Check Financial Strength Ratings

For consumers of the digital age its not all that difficult to check a companies life insurance rating. Keep in mind that there are essentially four different financial strength ratings from four different agencies. Each rating agency uses their own lettering system and lettering grades, therefore it is not really possible to check one financial strength rating from one rating agency vs another financial strength rating from another rating agency To check a financial strength rating with insurance specialist AM Best, merely go and type in the name of the insurer that you want to check.

The Corporate Entity:

Checking financial strength ratings with some insurers can be confusing as many conglomerates have numerous different corporate entities. Understanding exactly which entity you are receiving a quote from may be the hardest part of checking the rating. If you are confused or do not understand, ask your life insurance agent.

Best Practices When Checking Financial Strength Ratings:

  • Compare Apples with Apples. Choose One rating agency to compare all of your potential carriers.
  • Consider doing a full secondary check with a different second rating agency.
  • Try and check the financial strength rating yourself rather than depend on an out of date document or website.
  • Always check financial strength ratings whenever you are considering any type of insurance.

Author: Scott W Johnson is the owner of Whole Vs Term Life Insurance.