So many of us live for the day, however, it's good to give some thought about our tomorrow’s especially as we get older. Sadly, for many, their pensions will probably be inadequate to enable them to retire at 65 and due to the fact we are now living longer, many will have to carry on working until they are at least 70. With this in mind, it’s worth spending some time thinking about what we have, what we will most likely need and what it will take to get there. Getting financially fit can be as scary as getting physically fit, if not more so..
Scenario planning
Loss of job / main source of income
Short term absence from work due to illness
Disability / severe illness long term
Disability / severe illness of a family member
Death
Death of a family member
Pension pot – what do I need to survive ?
Advantages of Private Health cover
Travel Insurance / Accident insurance
Mitigation tactics
Rainy day fund: If possible it’s good to have between 60% and 100% of a years salary (virtually impossible) tucked away to prepare you for the unexpected scenarios that pop out of no where ie: job loss, illness, school fees, weddings, funerals etc.
Illness: Your work may have an occupational scheme which will pay more that the statutory sick pay scheme, both of which are paid up to 28 weeks.
Critical health cover will generally pay out a lump sum, to hopefully pay off your mortgage and some policies also provide a monthly living benefit in addition.
Life Insurance, could be a good way of supporting your next of kin with a good lump sum !
Unfortunately, there’s not a lot you can do about dying apart from trying to be helpful. A will is a useful document to have in place as it sets out your wishes and makes it much easier for your next of kin to sort out your affairs. You're not around to worry about it, but others are so it would be good to make it easier for them. Many people don’t have wills which is amazing as there are a number of online services plus local solicitors ready to assist.
Pension, you can top this up with over payments, and put up to £1.078m (gains and interest) into a pension tax free amount. You can consolidate all those old pensions into a Sipp that you can self manage or you can have a pension adviser help you with your choices. What ever you do, check out the charges and shop around as some of the charges can be high, remember its your future cash. Once you max out your tax free pension, people look for other assets to invest in for a regular income, buy to let property is popular as you should get appreciation on the property over time plus you receive rental income at the same time providing a regular income. Otherwise you can continue with your pension pot fund but it will be subject to tax. Probably a good idea is to try and work up a "what will I need" as a budget to scare yourself into reality !
Private health cover, can definitely help you get treated more quickly if you are diagnosed with something nasty, or need an operation – it is expensive but might be worth considering given the current back log of operations due to Covid in the NHS. However, watch out for the pre existing conditions exclusion.
When ever you go away or engage in a semi dangerous sport, make sure your travel or accident policy allows you to do it, skiing, parachuting, diving, climbing and many others may be excluded but check to make sure your covered, whatever the sport or adventure your doing, otherwise the policy your buying may not respond.
Spring cleaning
How many of us don’t have time to go through our bank and credit card statements on a routine basis ? However, there are probably lots of little items on there that we have forgotten about, especially with our trusted friend the Iphone with subscriptions that we have signed up to, but aren’t now using due to time. Here are a few things to consider:-
Subscriptions, review on your phone what you are signed up to and question whether you are really using them, don’t be afraid to cancel.
Credit card statements, google the name of something if you cant remember what it’s all about.
Fees – question fees that you don’t think are right and ask for an explanation.
Multiple credit cards, question yourself why you have these and wouldn’t it be better to consolidate into fewer if possible
Check for best deals on everything from utilities, internet, credit cards to banking, Car and House insurance. Can you save money without too much fuss ?
Summary
Its important to review your financial health from time to time, to make sure that you are protected against certain situations and to make sure the products that you have purchased are still up to date and fit for the job. It might sound morbid planning for certain situations that we have no control over, however it is so important for you and the rest of your family. These are just our thoughts, if you need more information suggest researching or contacting an independent financial adviser.
Brett’s view
The similarities between your financial health and your personal health are startling. Disregarding the health of either can be costly , requiring you to work twice as hard to get either of them back into shape. Something that’s tougher to do as we go older..
David's View
I try to look at our subscriptions on a regular basis, I am the worst at just thinking its only 9.99 per month and the next minute I am all signed up to multiple iphone apps, plus having 3 children they are always wanting to download something or other. Must admit I bought a term life insurance a number of years ago which was very well priced which is a good benefit to the family should I die.