It’s easy to assume that all the major changes in life like establishing a career, marriage and having a family, take place before your fifties, but these are increasingly stretching into later decades. Add to this the changes that mid and later life brings, and the need to keep on top of your financial planning is, if anything, even greater.
Along with your forties, your fifties are almost certainly the age when your earnings are at their peak and by now there’s a chance for some of us that our children will no longer be dependant, or their financial dependency will be reducing. For others however, there will be the inevitable challenge of supporting still dependent children or those struggling with the costs of education or saving for a deposit for their first home, whilst still trying to plan for their own futures.
Your fifties are the time to maximise your savings ready for retirement where possible, and to make sure that they are invested as tax efficiently as possible. The right action now could make a lot of difference when you eventually retire, whether it is in maximising your pension contributions, or opting for the flexibility and tax efficiency of Individual Savings Accounts.
If your income allows it, your fifties are also a good time to reduce debt, be it long term debt like a mortgage or shorter term debt like credit cards. Conventional financial wisdom dictates that you should almost always pay off the debt with the highest interest rate first which would normally mean paying off your credit cards before your mortgage. But for many people the allure of being mortgage free is a very powerful motivating factor.
If you’re planning to retire in your mid-sixties or later, then the early part of the decade should simply be a repeat of your fifties: continue to save, reduce debt and work with your financial adviser to keep your plans on course.
However, at some time in our sixties the vast majority of us will retire. There are many options around taking your pension, whether it is deciding how to take your income or deciding how to invest any tax free lump sum you receive. The options at retirement are outside the scope of this article, but retirement is a time when working with your Wealth Planner is crucial: the decisions you take now could well affect your standard of living for the rest of your life, making the wrong decision could be both irreversible and costly.
Your sixties may also be a decade where you start to think about your long term health and any care you may need in later life. There are very few of us that reach our sixties without some health worries along the way and it may be that private medical insurance or long term care planning are all subjects to think about.
To a great extent financial planning in your seventies will be dictated by your health and your income. Hopefully the results of planning and preparation will mean your income for the rest of your life is now established and, if you are wealthy, you may also be able to look at giving away some of your income and/or wealth to reduce an eventual inheritance tax bill.
Essentially, your seventies are a decade in which to relax and reap the rewards of a lifetime of sensible financial planning. Continue to have regular meetings with your financial adviser and continue to take all the prudent steps with regard to tax efficient investment and savings. But above all, the message for your seventies is simple: “You’ve worked hard: you’ve planned your finances: now enjoy it!”
If you would like financial planning advice on saving for your future, please say hello, we’d love to help.