A THIRD of 40- to 60-year-olds have not got a rainy-day fund and more than half will not have enough for even a “moderate” retirement.
That is according to analysis by pension and investment firm Hargreaves Lansdown.
A new Government website is encouraging people in the middle of their working life to take stock of finances and get on track for the future.
It is also aiming to help over-50s who are out of work or looking for a change in career to boost earning potential.
Leah Milner shows how to do your own Midlife Money MOT, using the site and a host of other tools.
Take stock
YOUR forties and fifties are a key stage in life – when you should take a close look at your finances and make sure you are on the right path.
That is according to Laura Suter, head of personal finance at AJ Bell, a pension and investment firm.
She says: “A lot may have changed that could affect your finances.
“You might have had children who are still reliant on you, had a career change, divorce, inheritance, or fallen into debt or built up savings.
“It’s a time to reflect on what you want to do over the next few decades and make sure your money is on the same track as your life plan.”
Start by gathering together all the paperwork you can for your mortgage and pension, if you have them, as well as for any debts.
The Government’s new Midlife MOT hub is a good starting point.
In the Your Money section of the site you can find a questionnaire that takes five minutes and will give you a report telling you what areas you should focus on and where to get support.
See jobhelp.campaign.gov.uk/midlifemot.
Housing
GETTING to grips with any future housing costs will be fundamental when calculating your potential retirement date.
If you are paying back a mortgage, check the paperwork to see when your loan term is due to end, says Laura.
She adds: “If it is later than when you were hoping to retire, you’ll need to think about whether you could increase your payments.
“Other options might include selling up and moving to a cheaper home to release some money.
“Equity release might also be an option but you should get independent advice. Find advisers at unbiased.co.uk.
“If you are renting and don’t expect to own a home before you retire, you will need to save an awful lot more to cover those costs. You might have to work for longer.”
For help with housing benefits and other support you might be able to claim, see Turn2us.org.uk and try its tools and calculators.
Pensions
IF you have saved any money into workplace pensions through your current or previous jobs, tally up the total.
Sarah Coles, money expert at pension and investment firm Hargreaves Lansdown, says: “You can find old pensions, even if you have lost the paperwork, by phoning your previous employers or by using the Government’s Pension Tracing Service.”
See gov.uk/find-pension-contact-details or call 0800 731 0193, but watch out for copycat websites that try to charge a fee.
When you have got the paperwork, look for annual charges on your pot.
You might be able to save thousands by moving your pension to a cheaper plan, like Vicky Quait, see case study below.
But Sarah adds: “You first need to check that you won’t pay any hefty transfer fees or lose any valuable benefits by doing so.
“Use the pension calculators at moneyhelper.org.uk to work out how much income you are likely to get in retirement including the state pension.”
Sarah says you should also check for any gaps in your National Insurance history by logging into your account at Gov.uk – these could reduce your state pension.
Where there are missing weeks or years, you can sometimes plug gaps by paying top-ups.
Debts
IF you are struggling with debts, speak to a charity such as Stepchange to help you work out a plan.
Watch out for debt companies that profit from selling advice or recommending expensive plans which might not be in your best interest.
An independent debt charity will help you work out which bills you need to prioritise and can negotiate with companies you owe money to on your behalf, to agree payments you can afford.
Write a will
PLANNING for what would happen if you get a serious illness or die is an uncomfortable but vital part of a midlife MOT, says Sarah.
It is particularly important if you have a partner, children or a parent who is financially dependent on you.
Sarah says: “Check what you get from your employer, which might offer life insurance or cover that pays out if you are too sick to work for a lengthy period.
“If there is nothing on offer, consider buying it separately.
“The priority is life insurance, to cover the needs of your family while they are dependent on you, including the mortgage if you have one.
“Income protection and critical illness cover can also be a lifeline if you are unable to work.”
Find guides to different types of cover at moneyhelper.org.uk.
If you have not written a will, this should also be a priority.
October is Free Wills Month, when over-55s can get theirs written with no charge, although a donation to charity is requested now or in your will.
More than 200 charities offer a similar service throughout the year, normally to people who have donated previously.
These are listed at nationalfreewills.net.
I’m worried I’ll have enough when I retire
SELF-employed nail technician Vicky Quait used to work in finance, but says she’s been burying her head in the sand when it comes to dealing with her own money matters.
Vicky, 53, who lives on her own in Radlett, Herts, says: “I’m just about making ends meet but the cost of living has hit me hard and I’ve got nothing left each month to pay into a pension.
“I’m so worried about how I’ll get by in later life and if I’ll ever be able to afford to retire – can you help?”
Sun Savers editor Leah Milner says: “You’re earning between £1,000 and £1,400 a month from your nail art business, but with mortgage, energy and food costs there’s not much wiggle room to save.
“There’s seldom anything left after bills and you’re often overdrawn.
“Earlier this year, you did well to fix your mortgage for another two years – although your payments jumped from £217 to £258, had you left it much longer you could have been paying double that as mortgage rates surged . . .
“You told me that your two-bed house is currently worth around £455,000 and so you are considering selling and moving to a cheaper one-bed flat in the future when you give up work.
“This would hopefully enable you to pay off anything that’s still left on your mortgage by that time, but you are well aware that it’s unlikely to leave you enough extra cash to live on.
“You have an old workplace pension from when you used to work as a personal assistant in finance two decades ago.
“There’s £23,000 sitting in it, so I had pension expert Laura Suter of AJ Bell look at the charges. She found that you were paying 1.2 per cent a year – a lot more than many modern day plans cost.
“By moving to a lower charge plan, Laura calculated that over the 13 years until you reach state pension age, this could make a huge difference.
“Leave it where it is and you could expect to have around £37,400 assuming investment growth of 5 per cent a year.
“But move it to a cheaper plan with charges of 0.6 per cent and you could expect to have £40,300 – a saving of nearly £3,000.
“All over-50s can get a free appointment with the Government’s Pension Wise service and it offers a special review if you’re self-employed.
“Find out about this, plus how to plug gaps in your National Insurance record that could boost your basic state pension in the ‘money’ section of the Government’s Midlife MOT website: jobhelp.campaign.gov.uk/midlifemot.
“You’re keen to boost your income now to help you save, so you’ve applied to work some extra hours at a doggy daycare centre nearby.
“You could also try dog walking in between clients using apps like Pawshake and Rover to find work.”
