Financial Planning for the over 50s

Whether a school leaver or a septuagenarian, financial planning is a vital part of life. However, as you grow older, the factors you need to consider evolve and change as your needs mature.

When you are younger, financial planning is all about the long-term future and putting ideas together to ensure you start edging your way to getting what you want sooner rather than later.

Once you are over 50, although you may have many things you still want to see and do, you also need to start thinking about how your loved ones would pay for a funeral if the worst happened.

We take a look at financial planning for the over 50s and run through some of the considerations which should be taken into account.

Preparing for the worst

No one likes to think about their own death but making sure that all the necessary financial preparations are in place means that your loved ones will have much less to deal with while they are grieving.

"Look after your money, and it will look after you in retirement."

If you are willing to go that one step further, you could even make the preparations for your own resting place. An increasing number of people are opting to have their memorial stone constructed by a stone mason and pick their own cemetery – and even paying for it in advance – to save their family and friends from making difficult choices at a traumatic time.

You might prefer to leave the actual wording on your headstone, but there's no reason why you can't decide on everything else. Granite or marble? Polished or pitched? The choices over your headstone can be made in advance. You can even opt for a curbed memorial if your chosen cemetery permits these.

Pension arrangements

Hopefully, you will have been able to contribute to a personal pension. If this is the case, now is the time to view what arrangements you have in place and consider whether they would be sufficient to fund a comfortable retirement.

There are many types of pension funds that can be arranged

Although the exact value of your pension fund may well fluctuate in line with the market, it can be helpful to get an annuity quote so you know exactly how much extra income you can expect to receive once you stop working. 

This will help you plan for your future and decide whether you need to keep a small part-time job or whether you can afford that around-the-world cruise you have always promised yourself!

The other factor to consider is whether your pension fund needs to be moved to a low-risk, more secure investment.

Pensions are considered a long term investment, so investing in a fund deemed either cautious or aggressive carries little real risk as there will be time to make up any losses. 

The stock market, by its very nature, undulates, but any dips will even out over time, so there's usually no need to get worried by fluctuations in your fund value.

However, once you are nearing retirement, it's worth considering whether it would be more appropriate to move your fund to a less-risky investment. 

If the worst did happen and the market crashed, you may not have sufficient time for your pension fund to bounce back before you need to cash it in. Experts recommend moving your fund to a low-risk location the closer you take your retirement.

Conclusion

Just because you are over 50 doesn't mean you don't still have a long and fulfilling life ahead of you, and free of the shackles of work, you can finally spend your time doing exactly what you want.

However, financial planning is just as important as ever. Whether making sure your loved ones don't have too much to do if you were suddenly to depart this mortal coil or bolstering your pension fund so that you can have a whale of a time during your retirement, it's vital to make the necessary arrangements.

A Guide to Pension Sharing Orders

Like many people, you may be wondering ‘What is a Pension Sharing Order?’ A pension sharing order is made through the courts after a divorce or separation. Essentially, it is the process by which part or all of a pension is allocated to the pension holder’s former partner, who will then hold these benefits in their own right. 

A pension can be one of your most important assets, which is why it’s so important that a pension sharing order is implemented correctly. 

Implementing a Pension Sharing Scheme

To obtain a pension sharing order you will need to employ the services of an expert financial advisor, who will be qualified to advise you on the most suitable plan for dividing and re-investing pension benefits. All pension orders must go through the courts, who will determine exactly what proportion of a person’s pension must be allocated to their former partner.

A pension sharing order must be implemented within four months of the date when the pension scheme receives all of the pertinent paperwork. Each part of the scheme will have different requirements as to what documentation is needed so all paperwork must be delivered and processed on time to prevent delays in the pension sharing order.

The implementation of a pension sharing order is also dependent upon whether an internal or external transfer method is used by your pension scheme, which you should check before negotiations begin. 

Enforcing a Pension Sharing Order

To ensure that a pension sharing order is successfully enforced, it’s important that all parties go into the courts having asked a few important questions:
Whether or not the non-member can remain in the scheme.
Whether the pension sharing order recipient will need to wait until their normal retirement date, if the pension scheme in question allows for early retirement.
What charges will be levied by trustees, and if these need to be paid up front.
Whether or not your pension sharing order will accrue interest, either directly or through a qualifying agreement.
If internal documents need to be signed before a pension sharing order can be implemented, and the best way to go about gaining the signatures of both parties. 

The Advantages of a Pension Sharing Order

One of the reasons that so many people choose a pension sharing order is that it allows for both parties to make a ‘clean break’. Pension assets are split according to a percentage decided on by the courts, and a pension sharing order is managed from start to finish by court officials and an official pension sharing order advisor. 

Alternatives to Pension Sharing

There are several alternatives to a pension sharing order which may be used to divide pension assets in the event of a divorce or separation. Offsetting and earmarking are two of the other ways in which separating couples may decide to divide pension assets, however both are dependent upon certain other factors, such as the amount of available assets and the amicability of the separation.