Financial planning in later life
We all know that money can be a big headache for many people, especially those in later life, and those at or in retirement. Suddenly you have no job to go to, and with that your regular income changes dramatically. You have to try and survive on your pensions and investments; and for some people that can prove to be a day to day struggle.
Most people are reluctant to discuss money, either because they feel they don’t understand it, they are intimidated by it, or are simply just too embarrassed to talk about it. However, not everyone is a financial genius, and talking about money with your friends and family can actually be beneficial. It can help you to get your finances in order, can give you a regular financial health check, can help you budget and therefore can help ease the stress and strain of dealing with your financial affairs.
Where do I start?
Well, the first thing to do is to start with your income and expenditure. Work out what you receive each week or month from your state pension, any other pensions you may have, investment and savings income and any other source of income that you might receive, such as benefits. Then do the same with your expenditure. Write down what you spend on your council tax, your heating and lighting bills, your water rates, insurances, travel and food. This will give you a very quick and simple calculation of whether you are living within your means, or whether you are supplementing your day to day living from your savings and investments. Remember, when you are doing this exercise you need to include all your income and expenditure, so go through your bank account and credit card statements very carefully to make sure that everything is included.
Once you have calculated your income and expenditure the next calculation to make is in relation to your assets and liabilities. Therefore list all your savings accounts, all your bank accounts, and investments that you might have. This should include stocks and shares, if you have them. How many people now in retirement bought shares in company privatisations such as BT and British Gas amongst others, and have simply forgotten that they invested.
Then list your liabilities, or debts if you have any. This should include mortgage debts, credit card balances and any personal loans or hire purchase that you might have taken out. If you have any debt, look at how much this is and how much you are paying in interest each month on this. Given the poor interest rates on savings at the present time it will almost certainly improve your finances by paying off any debt that you may have from your personal savings. Your assets will reduce, but so will your liabilities and more importantly so will your outgoings.
What’s next?
Once you have assessed your income and expenditure and looked at your assets and liabilities, the next thing to consider is are you entitled to any benefits and are you claiming all that you are entitled to? It is estimated that a staggering £3.5bn a year in pension credit and housing benefit goes unclaimed. However, many people feel stigmatised claiming benefits, but they are there for a reason, and that is to help the people who need them. If you look at it in that way then they are your entitlement and you shouldn’t feel bad about making a claim.
The benefits system can sometimes be a bit baffling, especially if you are not particularly financially literate; if you fall into that category seek help. Age UK have a very good service to help with benefits claims, so contact your local office. Remember, everyone’s personal circumstances are different and they are and will become increasingly affected by such things as declining health and mobility as you age.
Any financial MOT that you undertake should therefore look at, not only at your current position, but also take into account what your future needs might be. For example, if you want to remain living in your family home you may need to budget for future improvements to make life easier for you, such as a walk-in shower, a stairlift or other improvements that you may need. What about your car, does that remain fit for purpose as you age, or are you likely to need to replace this? If so when, and how much is this likely to cost.
I’m ok now!
Well, that might be the case but that doesn’t mean that this will always hold true. It’s therefore important that you look at your financial position at least once a year to re-assess your needs. You can then make any changes to your lifestyle that are needed. I guarantee you that if you take control of your finances you will feel more confident and more settled in yourself. And don’t forget one final thing, when planning, build in a little extra to treat yourself now and then, after all, you can’t take it with you!
And finally
Make sure that you have a will, that it is up to date and accurately reflects your wishes and that your loved ones know where to find it.
(Article source: Mature Times)
