Taking practical steps to look after your money is always important. Without proper financial management, you could accumulate debt and not be able to afford the things you need.
These top tips cover everything from savings and investments to fine-tuning your pension.
1) Review your everyday finances
Before you get started, you need to get a clear picture of your financial situation. This can be done by completing a mini financial audit.
Sit down with your records and make a list of all the organisations you deal with. Remember to note important details like customer and account numbers, and be mindful of ‘lost’ assets.
Millions, if not billions of pounds sit unclaimed in UK savings accounts. So if you think you have lost or forgotten about an account, double check using a free service like Lost My Account. It could net you a small nest egg.
2) Make your money work harder
Loyalty is rarely rewarded in the savings market. Some savings accounts pay as little as 0.01% and those targeted at long-standing customers don’t necessarily pay the highest interest rates.
To make the most of your savings, evaluate each savings account separately and use a comparison site like Go Compare or Which? to work out where you are better off investing your money.
3) Simplify your bill paying
Paying household bills is an ordinary part of adult life, much the same as doing the weekly shop. However, if you pay your bills at the Post Office or by cheque, you run the risk of missing a payment if something goes wrong.
Setting up direct debits or standing orders for regular payments simplifies the process and reduces your chances of missing a payment. Even better, some service providers incentivise customers by offering a lower rate to those who pay by direct debit.
Learn more about setting up a direct debit on the official site.
4) Optimise your pension pot
For the large majority of people in later life, their main source of income is going to be their pension or a combination of pensions. As such, it’s very important that you make sure your pension is as healthy as possible before and during your retirement.
- Use the Government’s state pension forecast to see how much your state pension is worth, when you will receive it and, if possible, how to increase it.
- Estimate how much income you will need to live comfortably during your retirement. Consider how your finances will change when you leave the workplace, and remember that you will be entitled to additional benefits in later life.
- Consolidate your pensions into one pot so you know how much money you have accumulated during your career.
- If possible, think about topping up or deferring your state pension. It could improve your financial situation in the long run.
- New pension freedom rules mean that those over 55 no longer have to buy an annuity with their defined contribution pension. This means retirees can either take one or more lump sums, move their money into income drawdown, buy an annuity or a combination of all three.
- Pension credit tops up your state pension if you are on a low income and can be used to cover housing costs. Find out if you are eligible here.
5) Apply for the benefits you are entitled to
When you reach retirement age, you instantly become eligible for a number of benefits. Some people are hesitant to claim as they worry it will involve a lot of red tape. But claiming can be as simple as filling in a few forms.
Independent Age’s benefit checker can help you work out which benefits you are entitled to and how to claim. The charity also operates a free helpline for those who need extra support organising their finances.
6) Take advantage of deals
It’s not always possible to reach your long-term financial goals. But if you want to make the most of your money, you should keep an eye out for the latest concessions and over-60s discounts.
Organisations and businesses regularly offer older people unique deals as they know they are more likely to have additional income. A savvy retiree can take advantage of these and save hundreds of pounds during the course of their retirement.
If you’re not sure if a business offers a discount to older customers, check their website or ask in store. There’s nothing wrong with asking and businesses don’t always advertise their concessions. A good rule of thumb is to look out for student discounts – if they offer a student one, they probably offer a senior one too!
7) Boost your income
There are lots of ways for elderly people to supplement their income, whether it’s buying low at a car boot sale and selling high on eBay, or putting old skills to good use and becoming a tutor online.
If you want to start something new, mystery shoppers are needed all the time. Pay varies and some agencies only pay in reward cards or vouchers. But if you’re not particularly fussed about saving money or reaching a specific savings goal, then roles like this are ideal for older people and can add colour to your week.
Additional ways to earn money during retirement include:
- Trading in old books, CDs and records
- Sending letters or stories to magazines
- Renting out a parking space
- Starting a blog
Managing your finances in later life isn’t easy. There are lots of things to consider and it can take years to get used to living on a fixed income.
If money worries are making you feel stressed, talk to someone you trust and consider contacting a money advice service. Lots of places offer free and impartial advice to elderly people, and they can help you arrange a retirement plan, improve your financial literacy and increase your credit score.