Parents putting financial health at risk to fund university costs
When it comes to funding a university education, it is parents and grandparents who typically look to provide the money. But even though this may be the case, last year’s graduates from English universities still left with an average of £44,000 debt (source: Sutton Trust), with some parents still, on average, expecting their children to leave university with £23,000 debt.
Students are closer to the mark, predicting an average debt of £35,000. Students expect, on average, to take 17 years to pay off their debt once graduated; research from the Sutton Trust suggests three in four graduates will be paying off student debts into their 50s.
Start thinking about preparing for any big events as soon as you can
None of us know exactly what life’s got in store for us, but we know that there are a handful of major events that we’re quite likely to encounter at some stage. These include some of the great milestones of life, such as buying a property, getting married, starting a family, buying a holiday home or planning for retirement.
It’s essential to start thinking about preparing for any big events as soon as you can. Often this means saving for major expenses that may not yet be in sight but which we know are awaiting us just over the horizon.
Mark Carney, the Bank of England Governor, delivered good news to the markets with his recent cut in interest rates (and further quantitative easing). It may have been good news to markets but was it good news for people trying to generate income from their investments? Certainly not good news for those relying on bank interest. To generate £10,000 of income (less than half of National Average wage) with an interest rate of 0.1% you would have to deposit £10,000,000. This is over ten times the maximum that an investor is allowed to have in their pension fund – let alone the fact that the vast majority of people will get nowhere near the maximum allowed.
So what can investors do? How can they make sure they have a sustainable income in the long run?
Taking an active interest in your retirement savings
Millions of savers currently spend very little time reviewing their pensions, with more than a quarter of savers (28%) admitting to never reviewing their retirement savings, while almost a fifth (19%) of those with a pension said they review it less than once every five years according to figures released by Aviva.
Gender also has a role to play. The number of women who are not engaged with their pension is particularly high, with almost a third (32%) saying they never review their savings, compared to a quarter (25%) of men.