Finding time to reassess and refresh your financial priorities and goals can be difficult. One study1 found that 32% of UK adults had failed to update their savings, pensions or protection plans over the past decade despite experiencing life changes.
The findings point to a growing disconnect between people’s current lives and how they manage their money. Despite rising incomes, a third of adults say they are saving no more than they did ten years ago, while 28% admit they are saving even less. Almost four in ten (39%) have not increased their pension contributions in line with pay rises, while 32% continue to rely on default contribution levels, and over half (57%) worry they’ve missed opportunities to grow their wealth, while more than a third (34%) say their emergency savings would not cover three months of expenses.
So, why not give your financial wellbeing a health check before another year draws to a close. Here are some key things to consider.
Will I have enough money to help my family?
Supporting ageing parents, children or sick partners can take its toll both emotionally and financially, especially if you’re part of the sandwich generation with multiple care commitments.
One survey2 found that 74% of carers are worried about the impact that their caring role will have on their finances in the future, with 24% saying they had cut back on, paused or stopped paying into a pension because of the financial costs of care.
As well as hitting your earning and saving potential, family members might need a regular or an emergency injection of cash to help with living or learning costs. One report revealed that 73% of high-net-worth parents are providing financial support to adult children and 68% are supporting their ageing parents or grandparents3.
When assessing your finances, it’s a good idea to think not only about your potential needs but also those of your loved ones, so you can all enjoy some good times together in the future. Only 16% of parents aged 50-plus have planned for their children needing urgent financial support during their retirement4.
There are lots of different ways to provide one-off and ongoing financial support to family members – from setting up trusts to opening dedicated savings accounts. Your Finli planner can advise on the different options based on when and how you might need to access funds. They can also suggest ways to plug income and pension gaps while you focus on caring for loved ones.
How can I prepare to leave and receive a legacy?
In our later years, inheritance is often a two-way street with wealth passing between different generations. Care costs and tax rules, however, can have a significant impact on the value of any legacy.
Whether you’re expecting to leave or receive a legacy, it’s wise to plan ahead – especially if you are among the 34% of Brits that are financially depending on an inheritance to some extent in the next 20 years5.
It can be difficult to make decisions when you receive a sudden lump sum at an emotional time. Talking to your Finli planner will make it easier for you to make an informed choice and protect the value of any inheritance.
Adapting to the new Inheritance Tax (IHT) rules on unused pensions, which come into force in April 2027, will be key to maximising legacies for loved ones. Your Finli planner can explain the impact of the changes and suggest ways to reduce the IHT payable on a person’s estate.
How can I plan for a comfortable retirement?
Dream holidays. Family outings. Theatre trips. Retirement at any age can be full of exciting opportunities. So, it’s important to ensure your pension pot is big enough to fund both one-off expenses and everyday living.
Current trends reveal that around three in ten private pension pots are accessed at the earliest possible opportunity with half of all pots taken out in full6, which can lead to a shortfall later in life.
With people living longer, it can be challenging to work out how much money you need – particularly given rising care costs. One report predicts 35% of Brits aged 50 and over are facing a retirement savings shortfall of at least a decade,7 but there’s still time to plug the gap – especially if you’ve yet to stop work.
Time for a financial reset
Managing your money as if it were 2016 could leave you underprepared for the life you’re living today and for the future you hope to live. Financial inertia can wreak havoc with your finances. Even in the face of financial challenges, small refinements now could help your money work harder for your future.
Reviewing your pension, savings, protection and updating your Finli planner on any changes to your circumstances and financial situation can make a meaningful difference over time. Get your money working as hard for you as possible.
1L&G, 2Carers UK, 3Credit-Connect, 4Barnett Waddingham, 5Level, 6Pensions Commission, 7NICA
The value of investments can go down as well as up, and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.
