This week’s Financial Planning Week, which is one of those ‘consumer awareness’ campaigns dreamed up by the Institute of Financial Planning, comes accompanied by a YouGov survey with the cheery headline: Ticking Timebomb for Consumers’ Long Term Financial Future.
The ticking they are hearing is caused by the apparently dire state of the nation’s finances. The survey found that four-fifths of those they questioned believed they weren’t saving enough for their future needs, with the result that over half admitted to worrying about money either always or most of the time.
There are lots of simple steps you can take to start regaining some control over your future, no matter what stage of life you have reached
The even gloomier news is that one in ten thought they would never be able to afford to retire, including a worrying 12 per cent of people aged over 55.
However, all is not lost. It may still not be too late to turn over a new leaf, according to the IFP, which is urging us all to start putting our accounts in order – even those who have reached their fifties with no discernible means of future support.
“It can seem daunting, but the worst thing you can do is stick your head in the sand and hope it will all come right,” says IFP spokeswoman Sue Whitehead. “We can’t promise to find an overnight cure, but there are lots of simple steps you can take to start regaining some control over your future, no matter what stage of life you have reached.”
After coming up for air from the sand, the IFP suggests taking these first steps:
Work out your budget, not just for now but for the future too. How much will you need to live on in retirement, and how close are you to achieving it? To help you get started, use the Money Advice Service budget planner.
Even without a pension fund, you still have assets, from the equity in your home to bank savings. Review all those assets including their current value. Having done that, subtract your liabilities (i.e. debts) to find your net worth.
Look honestly at the shortfall between this and the amount you want to achieve, and consider ways of making it up. For some inspiration, download the Guide to DIY Financial Planning on the front page of the Financial Planning Week website or the Saving for Retirement Guide at Money Saving Advice.
One of the IFP’s members, Mazars Financial Services, offers a further five practical tips.
1 Get a valuation of your State Pension entitlements (you can do this online at DWP).
2 If you have pension funds, consider moving them into less volatile investments as you approach retirement. Unpredictable stock market falls just before you retire could significantly reduce the fund providing your future income.
3 Consider whether you require a cash sum from your pension. Usually up to 25 per cent is available as a tax-free lump sum, but of course that means a lower income in future.
4 Remember, retirement income doesn’t have to come from a pension. Look at rearranging any other investment you have including share and savings to help provide an income.
5 It might sound strange, but if you smoke or have health issues, you could be entitled to a higher level of pension income, so if this is the case be sure to inform your financial planner.
Financial Planning Week’s website has numerous other tools and useful links, and if you need assistance, it can direct you to a professional financial planner in your area. There is also a FPW Facebook page. The week runs until 27 November.