WHAT’S THE LONGTERM PLAN AND CAN YOU AFFORD IT?

It’s easy to bury your head in the sand about finances. But that’s how people end up penniless.

Have you ever stopped and thought how you’ll spend your latter years? Jokes about living out our days at “Sunny Acres”, reading novels from the depths of a sun-kissed hammock, or bickering away the day with our best buddies in a huge and riotous house share, Golden Girls-style, are all very well, but how many of us actually stop and consider what we want to do when we’re older? Will we ever give up working? Do we actually want to? And would our finances allow?

I suspect I’m not alone in avoiding thinking too long and hard about this (until now). The years since the two-headed beast of career and family took over my life have left little space or time for future planning – and it’s frightening to contemplate. Asking my friends, all in their late 50s, if they have any kind of plan and whether they have a pension to help make it happen, the answer to both was a big fat no. And I get this – I’ve never been much of a planner. But we can’t just bury our heads in the sand, says financial adviser Diane Watson “Thinking it will just somehow sort itself out is not very useful – so start making financial plans now”.

Asking my friends, all in their late 50s, if they have any kind of plan and whether they have a pension to help make it happen, the answer to both was a big fat no.

It’s exciting to think about all the things we want to achieve in our lives, the holidays we’ll take, the adventures we’ll have. But take off those rose-tinted specs a sec… do you actually know how much you’ll have to live off and how you aim to spend your latter years? Many of us assume we’ll be fine because we won’t need much to live off when we’re older, but this isn’t necessarily the case.

According to recent Statista research 46% of the UK do not have a retirement plan in place. And with state pension going up to 67 in 2028, many have to just keep earning in order to keep a roof over our heads. According to research by the Pensions Policy Institute, five million older workers face a retirement crisis as they will fall short of an ‘adequate’ income once they leave work, a situation worsened by a sharp rise in redundancies among over-55s since the Covid pandemic. Meaning many could be pushed into financial insecurity and poverty.

“Women are particularly at risk of becoming exposed to difficult financial situations,” says Diane. The Gender Pension Gap, the gap between the pension earnings of women and men, has increased 40.3%. That’s huge! Even if you are the type of person who loves living in the present rather than planning for the future, it is important to look at the bigger picture NOW. Unforeseen circumstances can leave you financially vulnerable. No one could have foreseen a global pandemic, and family deaths, health issues, divorces, children’s needs and redundancies can all have a huge impact on our finances.

Says Diane: “Women whose partners have always handled the family’s finances need to find out what assets, pensions, investments and debts they share, and what they’re entitled to and responsible for. If you abdicate responsibility for your financial wellbeing to someone else, you run the risk of having a poorer outcome. With one in two marriages ending in divorce, a lot of women have poorer pension accrual due to taking time off to raise a family, they often work part time and do lesser paid jobs”.

No ifs, no buts, it’s time to take our cash plans in hand. Says Diane “The idea that ‘it will be ok’ is not a good plan”.

Find out more at She Can Prosper.

Words: Marina Gask

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