When people reach their 50s and move into later life, their financial priorities frequently alter, as retirement becomes an immediate concern and long-term choices regarding pensions, savings and investments take centre stage.
Fromclearing a mortgage and reviewing past workplace pensions to evaluating investment risk, inheritance tax and prospective care expenses, choices made during this period carry lasting consequences.
Jennifer Crichton, associate planning director at Killik & Co, sets out some of the essential financial steps to evaluate across each stage of later life.
50s – pre-retirement
For people in their 50s, Crichton says it’s important to start thinking about what retirement will actually look like, rather than simply focusing on reaching a particular retirement age.
“This is the perfect opportunity to start thinking about what retirement might look like for you and what you want it to look like,” says Crichton.
“Figure out what your spending goals are. Maybe it’s more travelling when you get to retirement, or paying for a child’s wedding. Think about some of these big moments, as well as the type of lifestyle you want to live and your day-to-day expenditure throughout.”
She adds that this can also be a useful period to make the most of potentially having more disposable income, putting more money towards retirement rather than simply increasing day-to-day spending.
One area to consider is any outstanding debt, including a mortgage, and whether it can be reduced before retirement.
“At this stage I start to encourage my clients to think about things like is there a debt that they’ve still got left to pay, or a mortgage that they aim to pay off by retirement age and if they can step that up a little bit more,” says Crichton.
“It’s also good to think about investing in pensions as much as possible without the constraints of your normal day-to-day spending and then allowing yourself a cash reserve for anything that might come along in terms of emergency needs over that time.”
This is also a good decade to start reviewing old workplace pensions and considering whether they could be consolidated, while checking if you have adequate financial protection in case of long-term illness or death.
“Cash savings are always going to be important too, to make sure if you have a job loss or something happens, you’ve got cash available that’s not invested at that point,” advises Crichton.
