Pension: How over 55s can ‘take control’ of finances amid ‘ongoing crisis’ – act now

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Pension saving is considered to be important for retirement, but for those who are getting closer to leaving the workforce, or individuals who have already departed, financial wellbeing is also vital. Ensuring one has enough to see them through later years of life is key, but many have been financially upended due to COVID-19. However the pandemic has affected a person, reevaluating finances can be a good way to ensure individuals are on track and financially protected in all circumstances. 

To gain further insight, spoke to three well-versed experts, who provided help and assistance to Britons on how to manage their finances, particularly in retirement. 

Dave Harris, CEO of more2life commented on the matter, saying: “While the UK’s vaccine roll-out gives us hope that lockdown restrictions will be eased, the ongoing coronavirus crisis and uncertain economic backdrop have caused many over 55s to spend more cautiously. This is particularly true when it comes to non-essential, ‘big ticket’ items, like cars.

“This cautiousness is not a surprise when you consider the poor pension fund performance seen in recent months, and the job insecurity many older people are currently facing.”

With Office for National Statistics research showing people aged over 50 now make up one in four of all unemployed people in the UK, Mr Harris urged Britons to consider  their borrowing options when it comes to retirement.

He added: “Although debt plays an important role in our lives by helping us to achieve goals like buying a home or starting a business, those in alter life should be careful about which types of borrowing they turn to and consider how they can make capital repayments.

“Unmanageable debt can spiral for people on a fixed retirement income.”

Mr Harris recommended equity release as a potential solution for suitable over 55s who could unlock housing wealth without needing to move.

This could bolster a pension, or retirement income, helping Britons to achieve a cash sum to spend however they wish.

However, those considering this approach for their retirement should always take advice before enacting this kind of option.

Providing further insight on how Britons can manage their money and ensure they are financially sound was Mark Pemberthy, Head of Defined Contributions and Wealth at Buck. 

He said: “There are a number of simple steps people can take to get into long-term savings habit and future-proof their finances.

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“Try to take control of your money. Understand what is coming in and what is going out, and try to adjust spending in line with any change in household income.

“Always keep an eye out for ways to make your money go further, for example, using comparison websites to find better prices or deals on utilities – these can free up cash to save or cover other everyday costs.”

However, Mr Pemberthy also acknowledged the need for Britons to reevaluate their pensions, as many priorities have changed when it comes to saving.

While there may have been a shift to shorter-term provisions within the last year, people should still be actively considering their retirement.

Mr Pemberthy added: “When it comes to longer-term savings, one in ten UK workers has paused contributing to their pension due to the crisis.

“It’s vital for these individuals to plan for when they can resume their pension contributions in order to build up a savings pot that is sufficient for later life.

“Alongside this, consolidating lots of different pension pots into one larger pot can make it easier to manage and potentially also lower fees.

“The average UK worker builds up ten pension pots in their lifetime, so getting them in one place makes it easier to keep track of what you have and while also saving money.”

To fully address financial sustainability, Mr Pemberthy also considered another approach.

He suggested Britons speak to their employers to see whether companies are able to provide finance support – such as education tools, or workplace savings schemes.

Such a method, he concluded, could help people to become “more resilient to future financial shocks”. 

Finally, Vikki Jefferies, Proposition Director at PRIMIS Mortgage Network commented on how Britons can reorganise their finances at this time.

Ms Jeffries recommended customers work out a budget to help them understand how much they have each month after paying for essentials.

Such a move, even in retirement, can help people to juggle their finances and keep afloat, but will also help individuals identify where they can cut costs.

She added: ”Looking at rent or mortgage payments and household bills is often a good place to start to see whether it’s possible to reduce an individual’s monthly repayments. 

“Some consumers might be able to remortgage to a lower rate product for example, while others may be eligible for a less expensive contract on their electricity bill.”

In this sense, Ms Jeffries highlighted, much like for any other major financial decisions, enlisting the assistance of a financial adviser is likely to be key.

Particularly for individuals who have been financially impacted by the pandemic, whether this be their pension savings, or general household income, assessing one’s current financial standing will be important. 

Ms Jeffries concluded by urging Britons to ensure they have explored all options possible when it comes to their finances, and to avoid making brash short term decisions which could have a long-term impact. 

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