5 important things Kate Bush can teach you about saving for retirement
Kate Bush has been delighting audiences with her unique sound since the 70s, and this year she reaches the old pension age of 65.
As well as being entertaining and trailblazing in her industry, there is also a lot that can be learnt from her about pensions, tax, and financial planning. Read on to discover five lessons that could help you in this area.
1. Patience is key when it comes to investing in your pension
In June 2022, Bush’s hit ‘Running up that Hill’ enjoyed a spectacular revival after it was featured in the popular Netflix series Stranger Things 4. In the weeks following the show’s release, the song hit number one in streaming charts across the world.
The news was huge for the singer and for her legions of loyal fans, as the song originally peaked at number three in the UK charts and number 30 in the billboard hot 100 chart in the US when it was released in 1985.
The revival of the song works as a useful analogy for investments such as your pension. When you invest in your pension at any age, it’s important to remember that returns can sometimes take years or decades to materialise.
If an investment doesn’t generate large returns immediately, taking a long-term view can mean that, with a little bit of patience, you could be enjoying higher returns in the future when conditions are more fruitful.
2. Working after retirement can have significant tax implications
The revival of the hit song in Stranger Things 4 provides another useful lesson about taxes in retirement – especially the tax implications of working and earning an income after you have retired.
Bush was 64 when the Netflix show was released, an age when you might have already retired or begun to take a phased retirement. It’s estimated that since June 2022, Bush has earned almost £2 million from the single.
While this is a slightly unusual way of taking an income after you have retired, the principle remains the same: if you go back to work after you have started to flexibly withdraw from your pension, there could be tax implications due to the Money Purchase Annual Allowance (MPAA).
Once the MPAA is triggered, the Annual Allowance for contributing to your pension tax-efficiently falls from £60,000 to just £10,000. So, if you contribute more than this, you could face a tax charge.
3. Diversifying is crucial
Bush is a talented singer-songwriter but is also a dancer and actress. In fact, her dancing has always been a big part of her appeal to her fans.
When thinking about your investments, this multi-faceted approach is equally as advantageous. It’s important to diversify across different types of investments, funds, and markets to balance risk.
The reason for this is that if one fund that you are invested in produces lower returns than expected, having investments elsewhere that perform better – for example in a fund for a different country or sector – could make up for the poorer performance of the first fund.
The balance of your portfolio will be unique to you and your circumstances, and it could also change throughout your life. So, consulting a financial planner to help you to decide the balance that is most suitable could be very helpful at key points in your life.
4. Be yourself and focus on your own goals
Kate Bush is known for being quirky and different, marching to the beat of her own drum.
In many ways, this is one of the key principles of financial planning. While there are guidelines to follow, the message here is that your financial plan is yours – and it shouldn’t be influenced by what your friends, peers, or colleagues are doing with their money.
You should focus on your own goals, motivations, and challenges, to ensure you can create a future that you love.
5. Take inspiration from leaders
Even though Kate Bush has forged her own path, doing things her way, she’s always been very open about her influences and inspiration. She has taken inspiration from literature, music, film, and poetry in writing and producing her music over the years.
Planning your retirement and making investments for the future is no different. Of course, your plan should be created specifically for your goals, but remember that the advice and wisdom of the key principles of investing are based on 100 years of data and experience. They are there to guide you in best practice so that you can achieve your goals.
Get in touch
If you’d like to learn more about how to invest for your future, we can help. Email info@informedpensions.com or call 0880 788 0887.
Please note
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future results.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts.