Leaving your 40s behind may probably be when you feel that you have found your way in life, with a partner and a family, a home and a company pension to look forward to.
Your fifties are when you are likely to reach your peak earning potential. Your expenses may be starting to reduce, and you may find that you are in line for inheritance windfalls.
You may even feel that you have made the financial arrangements you need and can sit back and enjoy life. But passing years mean changing financial circumstances. It’s time to take a fresh look at your priorities.
1. Start putting more money in your pension
With hopefully some financial stability achieved, you can afford to concentrate on your pension.
Your pension potentially your most rewarding investment, thanks to the government’s generous tax concessions. These mean that putting £10 in your pension pot costs just £8 if you are a basic rate taxpayer, and just £6 if you are a higher rate payer.
So, it makes sense to contribute as much as you can – the concessions are so generous the government has set limits on how much you can put in.
You can contribute £40,000 (The Annual Allowance) or your entire income into your pension whichever is the lower – 2022/23 tax year, and a maximum Lifetime Allowance of £1,073,100 – frozen at this level until the 2025/26 tax year.
Remember, you could be looking forward to retiring at just 56 if you wish to do so, but this is only a possibility if you have sufficient funds.
So, check your pension arrangements. Look at your company pension scheme and think about using a personal pension to work alongside your employer’s plan to boost your retirement pot. At Continuum we can help provide projections to show what kind of retirement income you can look forward to – and ways to boost it if it falls short of what you need.
2. Look at your other investments
Your priorities for your investments outside your pension may also be changing. In your thirties and forties, there was plenty of time to make up any shortfalls if a speculative investment did not work out. With retirement now closer, there may be fewer opportunities for recovering from any falls in value.
You will probably want to rebalance your portfolio to include investments with less risk than you did previously. Returns may be slower, but the chance of losing what you have already made may be reduced.
A Stocks and Shares ISA may still be the foundation of your investment portfolio – but an attitude managed for conservative growth may now be the more appropriate choice.
You can invest up to £20,000 ISAs each year but if you have more cash to put to work, there are plenty of other ways to use investments. At Continuum we can help you select the funds and investments you need.
3. Getting the protection you need
You probably already have some life insurance in place, but you may need more protection for your family and for yourself.
As the years go by, the risk of serious illness may increase.
The fact is, the bills don’t stop coming in just because an income does, and by definition the unexpected can strike at any time. Illness, unemployment, the loss of a key contract if you run your own business – they all have the potential to derail your finances.
We can help you arrange a financial safety net covering loss of income and health problems and offering all-round protection for yourself and your family.
4. Thinking about the future
Thinking about the future is part of making the most of your finances in the present. Making a will is an essential part of protecting your family. Properly written, it can make sure that if anything happened to you, it is your loved ones who would receive your wealth – not the taxman.
5. Starting now
Money management is easier with an expert at every stage of life. Turning 50 could mean that it is time to talk to a Continuum expert to ensure you have the arrangements in place that you need now.
We can help you make the most of your pension and your investments, and help you secure the insurance protection you need,
Simply contact us at Continuum for the financial planning you need.
Call 0345 643 0770, email us at [email protected] or click on the ‘Contact Us’ link below.
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable Protection products or investment strategy, you should seek independent financial advice before embarking on any course of action.
The value of investments can fall as well as rise and you may get back less than you invested.
The Financial Conduct Authority does not regulate will writing.
The levels, bases and reliefs from taxation are subject to individual circumstances and may be subject to future change.