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Wednesday 23 May 2012

How much you need to save for retirement


Follow this guide and work out exactly how much you need to save for a comfortable retirement.



How much money do you need to leave work forever? (Image: Fotolia)

I'm going to give you one method for estimating how much you, personally, need to be putting aside for a comfortable retirement.
You'll need to set aside a fair bit of time to do this, so bookmark this page for later if necessary.

Step 1 - calculate your outgoings
Many costs, such as raising children and paying the mortgage, should be long paid for when you go into retirement. Other costs, such as greater heating and water bills, and buying more newspapers, might go up.
Some retired people need a fraction of what they needed when they were younger and others, particularly if they decide to travel a lot, need more.
Use this quick budgeting tool to help you estimate what your outgoings will be when you're retired. Just enter all the amounts in today's prices, forgetting about inflation for now.
Don't worry that you might get it wrong or that your needs and wishes will change by the time retirement arrives. We'll deal with that problem by the end of this guide.
Make a note of the total and keep the detailed breakdown of all your expected outgoings.
Step 2 - income tax
Another outgoing you'll probably have is income tax. This isn't in the budgeting tool.
Use this income tax calculator to get a rough idea how much tax you'll pay in retirement. I warn you, this can be a bit fiddly, but there's probably no point being too precise at this early stage.
To use the calculator:
  •  ignore the year column,
  •  change the age field to your desired retirement age range,
  •  type in your annual outgoings, plus £1,000 extra and
  •  press Calculate.
The results will show a yearly “net wage”. If that is roughly the same as your outgoings from step one, you can proceed on the assumption you'll pay around £1,000 in income tax.
If the net wage is wide of the mark, you'll have to press Back on your browser and use trial-and-error to get the net wage closer to the outgoings you estimated in step one.
Once you're reasonably happy with your estimate of taxes, add that to your outgoings in step one. You should now have total expected outgoings including taxes.

Step 3 - state pension
Estimate your future state pension income using this state pension calculator. The calculator will show your pension on a weekly basis, so multiply the answer by 52 for your annual pension.
If you're not confident the Government will be as generous by the time you retire, you could play safe by halving that estimate.
Write down your estimate.

Step 4 - calculate value of work pension schemes
You might have a final-salary or career-average pension scheme through your employer and others from previous employers. These are also called defined-benefit pensions.
Ask the pension scheme administrators for benefits statements, so that you can get a projection of the retirement income you'll get from your pensions.
If you don't know what pensions you've got, or can't find them, use the Pension Tracing Service.
Add up the estimates of your future retirement income from all the pension schemes.
Step 5 - your retirement income
Add together:
  •  the state pension estimate from step three and
  •  the annual pension estimate from step four.
If this total amount is higher than your expected outgoings from step two (which includes your estimate of taxes), it looks like you're on course for a comfortable retirement.
Don't forget that this is just a projection with lots of assumptions.

Step 6 - your retirement balance
Deduct the total in step five with your total from step two. Write this figure down.

Step 7 - your own pension saving
Now we turn to your existing savings and investments for retirement, which might include share ISAs, personal pensions, stakeholder pensions, SIPPs, and defined-contribution or money-purchase pensions from your employer.
Get the most recent annual statements from all these pots, or contact the provider to find out the size of your funds.
Add all the pots together.

Step 8 - how much do you need?
Use Hargreaves Lansdown's annuity table, or similar tables, to estimate what pot you'll need to save.
The table currently show a 65-year-old needs a £100,000 pot to get an annuity income of £6,000 per annum, paid every year for life.
If you don't already know what type of annuity you want, I suggest for this exercise that you use the “single-life, level, no guarantee annuity” if you're single. If you're married, you could use the “joint life 50%, level, no guarantee annuity”.
Here's an example to explain what to do next. Let's say that your shortfall in step six was £5,000 per year. Let's also say your annuity rate in the Hargreaves Lansdown annuity table is £5,400 per £100,000 (such as it is for a single person who wants to retire at 60).
Now you do this sum on a calculator:
  •  type in the figure from step six: 5000 in our example,
  •  divide this by the annuity rate: 5400 in our example, and
  •  multiply by 100,000.
In my example, the answer is 92592.593, which means you'll need to grow a pot of £92,592.59 to reach your comfortable retirement.

Step 9 - reaching the right retirement pot
The moment of truth. Use this compound interest calculator to estimate how much you need to save each month to reach your needed retirement pot. To use the calculator:
  •  type in your answer from step eight,
  •  type in how many years you've got before you want to retire,
  •  type in your answer from step seven
  •  type in an estimated annual return, for which I suggest you type 2.5 (More on that shortly.)
The calculator should now tell you how much you need to save.
Just for example, if you need to grow a pot of £92,600, already have £20,000 in personal pensions and share ISAs, and you've got 30 years before you want to retire, your answer in the calculator should be that you need to save £95 per month.

Hang on. Why use “2.5”?
For your annual gains, I have suggested you estimate around 2.5% per year. That might seem small, but this is how much your investments might grow over-and-above inflation, and 2.5% would actually be a fine rate of return.
If inflation averages 4%, say, with your 2.5% on top you'd be getting 6.5% per year in total, which is a lot more than you should expect from savings accounts.
A 2.5% return over 30 years will double your money in real terms, meaning that despite inflation you'll be able to buy twice as much with your savings.
You'll have to keep your saving and investing costs down if you want a reasonable chance of getting 2.5% or more above inflation. Do your research to find out how you could go about that.

Step 10 - Government contributions
The Government will pay you part of your pension contributions if you're paying into a pension. This means that, in my example from step nine, you wouldn't have to pay in £95 per month.
If you're a basic-rate taxpayer using a pension to save type the answer to step nine into a calculator, which is 95 in my example and multiply by 0.8
The answer in my example is £76, and that's how much you should save per month.
Higher-rate taxpayer can also currently claim back even more through your tax returns, which would rebate you another £19 per month in my example.

Step 11 - a safety net
I strongly suggest you add in a safety margin. If you can afford to pay an extra £25, £50 or £100 per month, that gives you some more assurance.

Revisit step one again
What you expect you'll need in retirement will change over time, and your savings and investments won't perform as you forecast. The income you might get at the end can also change.
That's why you'll have to repeat this exercise once per year to ensure you're on track. Do this every year and I think you should be able to stay on track with just minor adjustments, and few major shocks and surprises.
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How to make money from tourists


As a Brit, it makes my heart swell with patriotic fervour. As a taxpayer, I’ll admit I’m a bit worried. The Olympics alone is costing over £9.3 billion, which is hardly small change in the current financial climate.


This summer: London 2012 Olympics (l), Diamond Jubilee (c) and World Pride (r).

In fact, a recent report from Parliament’s spending watchdog warned that the overall cost is likely to be around £11 billion, although the Government disputes that figure.

British benefits
It’s not all bad, of course. Most of that money has been spent with UK-based businesses, which has means considerable economic benefits for struggling smaller firms.

According to the Department for Culture, Media and Sport, British companies have won almost £6 billion of contracts for building and supply the Games.

In total, 98% of the contracts let by the Olympic Delivery Authority have been given to UK-based firms and two-thirds of them were awarded to small or medium-sized enterprises.

That’s great news, but most of us are still feeling financially squeezed. Watching the Government spend £553 million on security alone can’t help but sting.

But hundreds of thousands of tourists, both foreign and British, will be flocking to the country’s major cities for the various events and celebrations, so can you make a few pounds out of them? After all, your taxes are paying for the party.

Here’s how you can make some money from the influx of tourists, wherever you may live.

Rent out your house
Are you quite simply sick to death of the Olympics? If you see another Olympic logo on a chocolate bar, will you lose control? Do you have to fight back the urge to throttle the Wenlock and Mandeville Olympic mascots every time you see them? Then maybe it’s time for a break.

One option is to rent out your entire house for the duration of the Games and use the cash you make to flee the country and enjoy a holiday instead.

Clearly Londoners are going to make the most money this way, but there are Olympic events happening all across the UK, including in Manchester, Cardiff and Glasgow. Every Olympic location is likely to get a tourism boost this summer.

Properties in the key cities could easily be let for over a thousand pounds a week during the Games. Take a look on websites like Gumtree and rentduringthegames.com to see what prices other would-be landlords are charging.

For example, on the Gumtree website, a one-bedroom flat with a sofa bed in north London is being advertised for £150 a night or £1,000 a week.

Of course, there are risks associated with letting out your actual home, so this isn’t something to rush into. You’d need to give the tourists enough space to live, which might mean moving your own clothes and treasured belongings into the attic or storage.

You’d also need to inform your home insurer and mortgage provider of your plans. If you’re skipping the country for the duration, you’ll want a friend or family member to act as a contact in case of any emergencies.

Still, if you’re comfortable with the risks then this could be a way to fund a decent holiday and escape the endless Olympic obsessing.

Rent out a room
Of course, you don’t have to rent an entire house. If you have a spare room, you could let it out during the summer celebrations. It might even be quite fun having an enthusiastic tourist or backpacker crashing at your house and explaining the rules of water polo.

Under the Government’s Rent-A-Room scheme, you can earn up to £4,250 a year without paying any tax, so this is a really simple way to earn some money.

Websites like SpareRoom.com and classifieds websites like craigslist can let you find tourists and backpackers looking for rooms for the summer months.

And once again, this isn’t just restricted to London – although rooms in the capital will be worth the most.

If you want someone else to take care of the business side of things then a company like Airbnb might be better for you. It’s free to list your home or room and then Airbnb collects 3% of all reservation fees, while guests are charged 6-12% of the booking fee.

You can choose whether you want to rent a room or your home for one night, a weekend or even longer. Airbnb collects the money for you, saving you an awkward conversation with a lodger who might feel more like a guest after a few days.

Rent your driveway
Parking space is going to be at even more of a premium than usual in London this summer. If you have space on a driveway or in a garage then you could consider renting it out to one of the thousands of tourists and Olympic workers who will be flocking to the capital.

There’s widespread speculation that the centre of London will become a no-go zone for commuters as thousands of extra vehicles cause gridlock. So, even if you’re on the very outskirts of the city, you could still rent your space – especially if you’re near a station.

Websites like ParkAtMyHouse.com let you advertise your parking space for free, although you pay a 15% commission on any successful bookings. Alternatively, you could simply advertise it on a classifieds site.

For example, one advert on Gumtree right now is advertising a parking space in Mitcham, London, for £50 a week.

Talking money
If you let out your entire house, you will have to declare the money you make to the taxman; it doesn’t come under the Rent-A-Room scheme.

There are tax breaks for letting furnished holiday homes in the UK, but only on properties that you make available for at least 140 days a year. That means that letting your home out over the summer would be treated as a residential letting.

Contact HMRC to find out the best way to pay any taxes owed. The taxman may simply tweak your PAYE code, so don’t be put off because you can’t face completing a self-assessment tax return.

A warning
Whatever you’re advertising, be careful not to give too much information away. If you make it obvious that you’ll be away for certain dates, you could attract burglars or con artists.

For example, if you advertise your drive and explain that you’re out of the house between 8.30am and 5.30pm then you’re making yourself look like an easy target. So be very careful what information you share.

You also need to be entirely confident about anyone you let a room or your house to. Make sure you see ID, take a deposit and full payment upfront, and lay down ground rules such as no smoking or pets.

You won’t make much money out of the Olympics if you’re replacing stolen property or the people you lease your home to run off without paying.

Sunday 20 May 2012

Tech giants clash over phone patents


Motorola Mobility smartphones face US import ban

SymbolPriceChange
MSFT29.27-0.45
A US commission sided with Microsoft (NasdaqGS: MSFT - news) by moving to ban the import of Android-powered Motorola (NYSE: MOT - news) smartphones based on patent infringement complaints by the software colossus.
The ruling issued by the International Trade Commission (ITC(Berlin: IQ9B.BE - news) on Friday will take effect in late July if President Barack Obama does not overrule it.
"The Commission has issued a limited exclusion order directed to the infringing products of Motorola and has terminated the investigation," the ITC said in a written decision.
The ITC ruling put pressure on Motorola Mobility to cut a licensing deal with Microsoft instead of risk product shipping delays that could stem from removing the patented technology, which related to scheduling meetings.
Microsoft said in a released statement that it was pleased with the ITC decision and hoped that Motorola will "join the vast majority of Android device makers selling phones in the US by taking a license to our patents."
Redmond, Washington-based Microsoft filed its complaint with the ITC in late 2010. Motorola phone models affected included RAZR and Droid 4S.
Motorola claimed a partial victory in the dispute, since the ITC only sided with Microsoft on one of nine patents at issue in the complaint.
"Although we are disappointed by the Commission's ruling that certain Motorola Mobility products violated one patent, we look forward to reading the full opinion to understand its reasoning," the company said in a release.
"We will explore all options, including appeal."
Motorola added that it did not expect the ITC decision affect it in the near term.

Sunday 6 May 2012

Sony's first ever ultrabook & more new gadgets

The Sony Vaio T13 Ultrabook is among May's hottest new gadgets and technology (Image © Sony)

Sony Vaio T13 Ultrabook and other great new gadgets


Sony Vaio T13 Ultrabook (© Sony)

Sony Vaio T13 Ultrabook
The Ultrabook market is already becoming a crowded place, but this is Sony's first crack at it. Sony's Vaio T13 is 17.8mm thick, weighs approximately 1.6kg and has a claimed battery life of up to nine hours. Inside is an Intel Core i3 processor, 4GB RAM and a 320GB hard drive, with the latter supported by a 32GB solid-state drive that is not used for file storage but instead improves the performance of the hard drive. Add to that a 13-inch screen with a 1366x768 resolution and you get a smart-looking laptop that could shake up the lower-end Ultrabook competition.
Availability: TBA
Price: TBA


Sony Vaio T13 Ultrabook (© Sony)
Samsung Galaxy S3
The king is dead! Long live the king! Samsung's Galaxy S2 was the phone that established Samsung as a serious threat to Apple's smartphone dominance. But it's been out a while now and has lately been overtaken by new releases from the likes of HTC. No longer. Samsung is once again top of the Android pile with this stunning handset, with it's 4.8-inch high-def screen, NFC functionality and voice-activated features.
Availability: 29 May
Price: free on certain contracts





Sony Vaio T13 Ultrabook (© Sony)


Disgo Tablet 8104
There's no doubt about the standout feature on the not-so-snappily-titled Disgo Tablet 8104: its price. This 10.1-inch tablet will get you a penny change from £150, yet its feature list is far from threadbare. Android 4.0 (Ice Cream Sandwich) runs on a 1.2GHz processor with 512MB of RAM. There's 4GB of internal storage - but that can be expanded by up to an additional 32GB via microSD. Battery life is stated at around five hours. The weakest link is likely to be screen quality - the display has a resolution of just 1024x600.
Availability: later this month
Price: £149.99



Sony Vaio T13 Ultrabook (© Sony)

Nikon D3200
Nikon's updated version of its entry-level DSLR camera, which supersedes the D3100, has a stack of improved features - notably a 24.2-megapixel sensor. There's also a more powerful processor inside, ISO speeds of up to 6,400 and a new version of Nikon's Guide Mode, which offers step-by-step pointers on the best settings for the type of picture you want to take. The D3200 can also shoot Full HD 1080p video at either 24 frames per second (fps) or 30fps.
Availability: later in May
Price: £559.99 (body-only) or £649.99 (with 18-55mm VR lens)



Sony Vaio T13 Ultrabook (© Sony)

Bang & Olufsen BeoPlay A3 iPad dock
B&O doesn't yet have a version of this new dock that works with the new iPad, which seems a bit of a gaffe. Still, there is one incoming and, in the meantime, the BeoPlay A3 will happily get along with your iPad 1 or 2. Switch it on and your iPad's sound will be pushed through the A3's superior speakers. It's designed to be viewable in several different positions - landscape, portrait or lying on its angled back for web browsing.
Availability: now
Price: £449



Sony Vaio T13 Ultrabook (© Sony)

Griffin ColourTouch Case
Remember Global Hypercolor? For about five minutes back in the 1990s these heat-sensitive T-shirts, which changed colour with your body warmth, were officially the coolest thing on the planet. Now that colour-shifting, tie-dye effect is back, albeit in the form of an iPhone case. Snap one of these onto your Apple mobile and you've got a case that goes all chameleon each time you pick it up. Essential, we're sure you'll agree. The cases are on sale now in Apple stores.
Availability: now
Price: £24.99



Sony Vaio T13 Ultrabook (© Sony)

LG Optimus L7
Part of LG's L Series, the L7 is a smartphone that's designed to be a little easier on the bank balance than the iPhones and Galaxy S3s of this world. It will set you back just shy of £300, but not too many corners have been cut to hit that price point. Think of this as high-end mid-range, if you will. The L7's slim profile is one of its most striking features - it's just 8.7mm thick with a 4.3-inch touchscreen (480x800 resolution). Inside is a 1GHz processor running Android 4.0 (Ice Cream Sandwich). Round the back is a five-megapixel camera which LG says can autofocus in six-tenths of a second.
Availability: now
Price: £299 (pay-as-you-go)



Sony Vaio T13 Ultrabook (© Sony)

Bowers & Wilkins P3
Can hi-fi be sexy? It can when Bowers & Wilkins is involved. The British loudspeaker company has a reputation for bold, classy design and exceptional sound quality - something that was much in evidence when it launched its debut set of headphones in 2010. The P3 headphones are a more compact and portable version of those, now sporting a folding design and smaller memory-foam ear cushions. They come in either black or white and with two remote control cables, one for iPhone/iPod, one for other devices.
Availability: June
Price: £169.99

Sony Vaio T13 Ultrabook (© Sony)

EchoStar Ultra Slim Box
Pity the poor personal video recorder (PVR). While every other gadget is the object of a designer's urge to make things smaller, thinner, slinkier, the humble PVR remains a black slab of plastic forever destined to be hidden away under your telly. No one cares about the looks of a PVR, you see. No one, that is, expect EchoStar - which has announced this, the slimmest PVR in the world. Just 14mm in height, it nevertheless houses a 500GB hard disk drive, twin Freeview+ HD tuners and internet connectivity.
Availability: 31 May
Price: £259.99



Sony Vaio T13 Ultrabook (© Sony)

Bang & Olufsen BeoPlay V1 TV
We bet you don't have a telly that looks anything like this one. The BeoPlay V1 has an eye-catching design that's unlike anything else on the market, apparently inspired by the Japanese art of paper folding. It comes in either 32- or 40-inch screen sizes and can be displayed in four ways - a table top stand, floor stand, hung from a wall or, rather interestingly, hung from the ceiling.
Availability: now
Price: £1,999