Some interesting figures have emerged recently from Ipsos Mori and King’s College London suggesting that many Brits wildly underestimate the cost of major life investments, like raising a child, university fees and investing in a pension. So here Acumen outlines some financial planning advice essentials to get you up to speed.
The financial cost of raising a child
Do you know the true cost of parenthood? How much debt your child can expect to accrue once they’ve graduated from university? Or how much money you’d need to pay into your pension pot to yield a comfortable income of £25,000 a year? The answer to all of these questions is probably more than you think.
According to the Ipsos Mori and King’s College London figures, the true cost of raising a child is £229,000. However, the average guess from polled adults was £50,000, with parents most likely to be off the mark. Average university debt is now a staggering £44,000, but respondents believed it was closer to half that figure at £21,000.
Perhaps most tellingly, most people grossly overestimated how much pension income they were likely to enjoy in later life. On average, they guesstimated that they would need to invest around £124,000 into their pension pot to reap that £25,000 annual income, including the state pension. However, the reality is actually more than double that at £300,000. Interestingly, given those figures, the average respondent thought that 65 per cent of the population isn’t squirrelling enough away for retirement, when in actual fact it is more like 43 per cent.
Bobby Duffy, Managing Director of Ipsos MORI Social Research Institute, told AOL Money & Finance: “We get a number of crucial things wrong about our personal and national finances. In particular we hugely underestimate the real financial implications of big life events and decisions – particularly having a family, going to university and retiring.
It’s concerning that we think under-saving for pensions is a very widespread social norm, when that’s not really the case. This is important – we know that our perceptions of what normal behaviour is can be a strong effect on our own behaviour
Speaking to Acumen adds up
Although it is possible to conduct your own financial planning, expert guidance from an independent financial adviser can make a world of difference and will ensure that your financial goals and dreams are realised.
Acumen’s 12-strong team, which includes five financial advisers, can help with the following financial planning areas:
- Investing a lump sum.
- Retirement planning and saving.
- Estate planning and saving.
- Inheritance tax.
- Dividing up pension entitlements on a divorce or separation.
- Ensuring the correct types and amounts of health and life assurance.
- Planning university and school fees.
- Planning and reducing borrowing risk.
- General financial ‘health checks.’
So why not let our highly qualified and experienced multi-disciplinary team work together with you and your family to offer a thorough and tailored approach to your financial planning.
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