If you’re over 50, you may find your priorities start to shift and it’s time to overhaul your finances – here are some key considerations.
Mortgages become tougher to get
Getting a mortgage can prove tricky as you get older – lenders often have their own particular rules on lending to the over 50s, which may involve higher monthly repayments, or borrowing over a shorter period.
Yet, there are plenty of reasons you may need to take out a mortgage when you’re older – if you haven’t yet repaid your home loan, say, or want to buy a second property.
You may want to discuss your options with a mortgage broker, as it will depend on the lender and some will even let people borrow into their 80s. But you’ll still need to pass stringent affordability checks to ensure you can afford the monthly repayments, which could be tougher if your income has dropped in retirement.
If you are heading towards retirement age and have yet to repay your mortgage, you might want to increase your monthly repayments. Alternatively, you could downsize, if that’s an option for you.
Financial help for the over 50s
You may be entitled to various benefits to make your money go further. It’s worth calling your energy supplier to see if there’s any free help to boost the energy efficiency of your home, and cut your bills. You may, for example, be entitled to grants for loft and wall insulation, alongside other financial help, which could dramatically reduce bills over time.
GOV.UK has a mass of information on what you are entitled to as you get older. This includes government help, such as a cold weather payment of £25 when the temperature reaches 0°C degrees or below for seven days in a row. You’ll typically get this if you receive Pension Credit, a tax-free benefit aimed at retired people on a low income.
Up to £3.8 billion of Pension Credit and Housing Benefit goes unclaimed by older people each year, according to Age UK in November 2018. Check out Entitledto to see if you’re missing out on any financial help.
Many people aged over 50 may find themselves in a caring role, and could be eligible to claim some benefits from the government to help financially.
Qualifying for over 50s life cover
Life cover can provide essential financial support if a family member dies, paying out a lump sum to pay towards some debts, for example.
There are plenty of policies specifically aimed at the over 50s on offer, but whether one of these is right for you depends on your age, health and needs.
You don’t typically have to answer any health questions or take a medical test to qualify for over 50s life cover. This can make these policies particularly appealing if you’ve suffered ill health, or you have a history of poor family health, for example. These policies can be more affordable for some people who may not have been able to afford traditional life cover.
However, it’s important to compare the whole market to see if you’re getting the best deal and right level of cover for you. This is simple to do using a price comparison site.
Retirement planning becomes a priority
By the time you reach your 50s, you’ll hopefully have a decent pot of pension savings, alongside an idea of what you’re aiming for in retirement. This includes how much you’ll need to live off to meet regular outgoings, and the type of lifestyle you want.
You’ll probably want to assess your financial situation, and may consider making additional lump sum contributions to boost your pension. If you’ve maxed out your pension savings, making full use of your annual allowance, you could build up savings elsewhere, using ISAs, for example.
Also, if you’ve worked for various companies over the years you may have paid into several different pensions. You can trace former pensions using the Government’s free tracing service . You may also want to consider consolidating your pension pots in a single personal pension, but before you do this check you won’t lose out on any benefits or pay charges which could negate the benefits of consolidating. You should speak to a financial adviser if you’re considering this as they can talk you through the options and flag any pitfalls.
You could also check your state pension entitlement on gov.uk, and pay towards making up for any missed national insurance contributions to add to your pension pot.
Considering your will and Inheritance Tax (IHT)
The only certainties in life, as the saying goes, are death and taxes.
For your own peace of mind and your family, you may want to start thinking about whether your will is up-to-date, and any IHT liabilities you may have and could reduce. There are simple ways to make a will without involving a solicitor, although you probably only want to go down the DIY route if your circumstances are straightforward.