The big 5-0 is a real milestone. Making the right financial moves in this decade can dictate the success or failure of your retirement plan. You need your money to be working hard for you. It’s certainly not time to take your foot off the gas.
Use our check-list to help you think about the long-term.
- Save, then save some more
Keep yourself motivated to save by looking into your future. Picture the life you want to be living in 20 or 30 years. Many people consider 65 to be the ‘finish line’ but you may live another 30 years or more. If you STILL haven’t started saving, don’t give up. Start now! Investing around £400 a month, gross of tax, between the ages of 50 to 65 could result in a pension worth £5,000 a year*. You can also top up your pension with a lump sum if you need to catch up.
2. Avoid major new debt
Unless you’re minted and have no money worries at all, now isn’t a great time to buy a fancy big house or that red Porsche you’ve had your eye on. You may have paid off your mortgage but don’t fritter the cash. See point 1 for what to do with it…
- Don’t access your pension unless you really, really have to
Changes to pensions that came into effect in April 2015 mean that from age 55 onwards you can access as much of your pension money as you want. But that doesn’t mean you should. If you’re physically able to keep working for longer, then you’ll have a much better pot when you do decide to put your feet up. Leaving your pension to compound and grow is definitely the smartest move.
- Invest in your health
This might seem a strange point to be making in a finance blog but it’s worth bearing with us. Investing now in quality nutrition and exercise will pay dividends later. You don’t need a costly gym membership – run, walk, cycle, challenge your friends at different sports. Keeping yourself healthy will save you money on prescriptions and healthcare costs but ultimately, it will help you to enjoy your eventual retirement. It’s pretty frustrating to save for your entire life then end up too ill to enjoy the fruits of your labour.
- Consider care for elderly parents
Gather your siblings together and have a discussion about what you’ll do if your elderly parents need specialist care or have to go into a residential home. Do you know whether they’ve made any financial provisions? If not, who will pay? It’s not a fun topic but it’s better to be prepared.
- Evaluate your portfolio…
If you’re already an investor, meet up with your financial adviser (*hi there!*) and start considering whether you should shift the mix of stocks and bonds in your portfolio to something less risky. If your asset allocation is fairly aggressive, it’s probably time to get a bit more balance.
- …But don’t be too conservative
Don’t worry, we’re not dishing out political advice here. We’re talking strictly about the small c version. If you’re lucky enough to live another 30 years there’s still a lot of market ups and downs to weather. Although it’s sensible to move towards more conservative investments as you get older, don’t overdo it. Compounding is still your friend and you’ll need its help to stretch your nest egg successfully into your later years.
*Source: Selectapension, based on a 5% pa growth rate and the purchase of a single life, level annuity at age 65.
This article is for general use only and is not intended to address your particular requirements. It should not be relied upon in its entirety and shall not be deemed to be or constitute advice. The value of your investments can go down as well as up, so you could get back less than you invested.
GreenSky Wealth Limited is authorised and regulated by the Financial Conduct Authority. FCA No. 629624. Registered Office as above. Registered in England and Wales, Company No. 07103441. Wills and estate planning are not regulated by the Financial Conduct Authority.