In your later years, there’s going to be plenty to think about when it comes to money. There’s so much to think about that it might seem overwhelming. Nevertheless, you must manage your money well as you head into later life.
Everyone’s circumstances are different, but it is possible to work out a realistic financial plan for your situation. To help you plan for your future and get a handle on bills, insurance, funeral plans, pensions, and retirement, here are some financial tips for older people.
Plan Your Pension Income
In the UK, the population continues to age. In addition, the NHS and the government struggle to cope with healthcare and support demands. It’s impossible to predict the future, but in the years ahead, private pensions may become more important.
State Pension
When you retire, you’ll likely be drawing most of your income from a mix of private and state pensions. The UK State Pension is the regular income most people in the UK can receive once they reach the State Pension age. For several years now, the age has been under review. There is a government calculator you can use to find out the current State Pension age and how much you might receive.
Private Pension
It’s never too late to start a pension, but ideally, you should start saving as early as possible. Most people contribute to private pensions through a workplace scheme, but there are other ways to do it, such as a Self-Invested Personal Pension (SIPP).
Know Your Benefits
A little extra money can go a long way and there are several UK government benefits available to top up your finances. Some helpful benefits to be aware of include:
- Attendance allowance
- Carer’s allowance
- Age-related help
- Disability living allowance
- Personal independence payment
- Bereavement support payment
Save Money on Your Bills
There aren’t very many people who like paying bills. As you get older, they can be a big worry. However, there are several expenses, such as rent, mortgage, and food bills, that can’t be avoided. That’s why it’s important to plan for essential expenses.
You’ll likely have less income after retirement, so you must get the best deal possible on your energy bills. A fixed-rate tariff is a very attractive idea. Try to compare prices across the energy market.
You can reduce your energy bills by doing the following:
- Turning off lights when you’re not in a room
- Turning down the thermostat by 1º
- Insulating your home
- Closing doors and turning off the TV when you’re not in the room
Think About Investments
Investments are a good way of securing a steady income or a lump sum after retirement. They will also help to relieve any financial constraints. Here are a few quick tips for anyone considering investments:
- Risk: A savings account is a safe bet, but the interest rate will be low. Remember, the greater the return, the more risk you usually have to accept.
- Types of funds: Low-risk bonds include Gilts which are issued by the government. They bring you a steady interest rate over several years. For a greater risk consider Equity Income Funds. These are investments in shares in companies such as BT and Barclays.
- Diversify: It’s smart to spread your money between different kinds of investments. Such a strategy reduces the impact of an underperforming investment.
Arrange a Power of Attorney and Write Your Will
A Power of Attorney is an important legal document. It allows a representative of your choice to make decisions on your behalf should you be unable to do so.
There are two types of power of attorney:
- Ordinary power of attorney: Only valid while you still have the mental capacity to make your own decisions.
- Lasting power of attorney: There are two categories, one for financial decisions and one for care decisions.
Writing a will is equally important and is something that adults of all ages should seriously consider doing, particularly if you have children or other dependents. Your will determines where your finances and assets go after you die.
Don’t put off making your will as it can make things difficult for those you leave behind. Your estate will also be subject to the rules of intestacy.
Funeral Finances
Talking about your funeral can be uncomfortable and upsetting. Funerals are also quite expensive and put a lot of financial strain on people. It is possible to pay for your funeral before you die with a funeral plan.
Finance for Care
Care is another expensive business so it pays to get a head start on the costs of care. Planning for care isn’t easy, because you never know what might happen in the future. It’s worth noting that nearly 80% of older people will need some sort of care by the time they reach 80. Working out how much money to put aside can be challenging, but if it means you’ll be able to stay independent in your own home it’ll be worth it.
