The final push to the winning line!
Ever thought ‘What’s it all about?’
Life is a complicated beast at the best of times and if you have not thought about what your world is going to look like when you’ve hung up your work clothes and submerged yourself into retirement or semi-retirement, now would be a great (if not slightly late) time! Time is pressing, and sure, your company put something away in a pension pot for you, or you have made your own arrangements, but have you ever stopped to take stock of what the winning line for you looks like? The point where you can say stop the work world, I’ve got enough to get off the treadmill now?
This opportunity, or issue, whichever way you want to look at it, is not going to go away and at this age, taking stock of what you spend, where you spend it, and how much you’re going to have coming should all be vital questions for you and your household.
Targeted budgeting
Have a think about the regular cost you spend in going to work and if these will continue. Things like work-wear (uniform, suit, overalls, etc), commute costs, pension contributions, season tickets, even gym costs, maybe the things that you won’t need to spend when you stop work.
What about the money that you will have to continue spending, like food, heating, clothes, holidays and a few things that you want to keep spending, like your hobby costs? Check your bank statements to see what’s going out and if any savings can be made that might be used more effectively elsewhere, like extra pension contributions.
Is your mortgage repaid and if not, how is this going to be achieved? If you plan to sell up to extinguish the mortgage and move to a more modest home, what age are you going to do this? What are your overall plans and do you and your partner, if you have one, agree what this is going to look like….and more importantly going to cost? If you need a good budget planner, have a look at the Money Helper offering here.
Do you have enough?
Well, anyone asked if they could do with more money is always going to say yes! But do you know what the minimum amount that you can survive on when work stops and you have all this time on your hands? Chat it through with your partner and see if you can agree the amount that you need between the two of you. I’ve used the term minimum and who wants to live on the minimum? You’ll want to have some fun in all this free time.
Check your (and your partner’s) State Pension entitlement
We know that the State Pension is going up and if you have not done recently, check this valuable source of index-linked income in retirement. It’s a great idea to check what you might be entitled to when you reach State Pension Age – many people expect to receive the full amount and even at this late stage, any shortfall can be made up if you have some surplus now, which might be the case whilst you’re working. You can check your State Pension here.
Check your existing pension benefits
Hopefully you will have built up a range of pension benefits through the different jobs you’ve held, and maybe through your own pension savings too. No matter how small they are, it’s important to make sure the funds are invested in line with your attitude to investment risk and it’s also worth checking the charges that you’re paying on each plan.
Also, don’t forget to check the death benefit nominations on your pension plans to ensure they match with your current circumstances. The children might be gone and you might even have grandchildren on the horizon!
Who pays what tax now and later?
If you and your partner have a big disparity between your incomes then there might be some tax savings to be made both now and when income is paid to you later, when you are retired. You should both have nil rate income tax bands now and in retirement, so make sure that your financial planning is ready to provide income to both to use up these valuable tax free allowances in the future.
Make a will
It’s an important document at most stages in life, but especially as you get older. Find a good solicitor to get it right. If cost is a real issue, you could use a Will Kit, which is available from any good stationer. The legal profession sometimes run a ‘free wills week’ and you might want to have a look out for this.
We hope you have been inspired to take action for your financial planning from the notes above. This SaidSo free guide is for guidance only.