Entering your 50s can often be a time when people take stock of their finances and start thinking about their investments, inheritance, retirement planning and future sources of income, such as pensions and savings.
Olya Edwards from Francis Clark Financial Planning outlines her top 5 things to think about for those in their 50s.
- Review your starting point
All great explorers know that effective navigation relies upon knowing your current position… at all times. Traversing the financial landscape is no different. Before we take the first step of our journey, we must take a breath, pause and reflect upon our starting position.
Where’s my starting point? Begin by identifying what you currently own (assets) and what you currently owe (liabilities).
Find a piece of paper or a spreadsheet and list:
- Income and expenditure – any money that regularly enters and leaves your bank
- Tangible assets – any physical possessions of value that you own (things like your home, cars, antiques, collectables and jewellery)
- Intangible assets – non-physical things you own or have claim to (like shares, pensions and insurance plans)
- Liabilities – anything you owe (things like loans, credit cards and mortgages).
- Look ahead – devise a plan
Once you have established your starting point, it’s time to begin creating a plan. Any plan will help to keep you on track, acting as a handrail for you on your financial journey. But to make things really memorable, it’s important that your plan is specific to where you are and where you want to go.
If retirement is your focus, ask yourself questions like – what does retirement mean to me? When do I want to retire? What would I like to do? What will it cost? How much will I need in my retirement?
Data from Unbiased suggests that on average, pensioners spend around £15,000 per year, after taxes and other living costs. We are living in turbulent times so it’s important now, more than ever, to devise your plan.
- Income streams
When you have decided what retirement looks like, you’ll need to figure out how you’re going to fund it. You may decide to carry on working or you may stop completely. Whatever you decide, you’ll need to identify your income streams to cover your expenses.
Pensions are the most well-known source of retirement income. However, your pension might only go so far in funding your retirement plans. Do you have one pension or two? Or maybe three? Do you know how to access them? If you’d like to make the most of your pension, or any of your financial assets, it’s worth speaking with a qualified financial planner. They will be able to help you unravel things – to make sense from the nonsense.
- Leave a legacy – make a will
With less than 4 in 10 adults in the UK having a will, you’ll probably be asking yourself, do I really need one?
When clients ask me this question, my response is always the same – yes, yes, yes! A will is a powerful legal document that spells out, explicitly and without ambiguity, your wishes after your death. A will can cover everything and anything in your estate (property, possessions, investments) and to whom or where you’d like it to go, even down to who takes care of the dog. Remember, as time moves forward, your situation may well change so it’s important to keep your will up to date to reflect this.
Sometimes, terrible and unforeseen things happen. Difficult decisions are thrust upon us. However, planning for these moments in advance can help relieve some of the weight we may be forced to carry.
Ensuring you have a nominated Power of Attorney (POA) for your property and financial affairs and your health and welfare goes some way to help. Your nominated POA will have the authority to act on your behalf, should you at any point lose capacity.
- Clear your debt
Finally – if you have any debts, it makes sense to clear them as soon as possible.
Reviewing your mortgage can reduce your monthly payments and/or reduce the term of your mortgage, freeing up extra cash for your retirement. Loans and credit cards also drain your money pots, so it makes sense to review these regularly too.
If you need help planning for your retirement – please contact us at Francis Clark Financial Planning. We will be happy to support you in planning your retirement journey.