If you’ve reached your 40s without starting to save for retirement, you could be forgiven for feeling slightly nervous about the future. The important thing to remember is that it’s never too late to start preparing for later life.
First thing’s first: you need to get straight.
With the recent state of economy, the reality for many is unpaid debt on credit cards or loans. Expensive debts need to be paid off as a priority, as you’re essentially wasting money in just paying off the interest.
Good tools for helping you to do this are software such as Microsoft Money, or even a standard excel spread sheet. Use these to calculate your incoming vs. outgoing funds, and how much you can realistically afford to pay back each month.
Enter Your Company Pension Scheme
By the time you hit 40 the likelihood is that you’ll have reached your peak in your chosen career route, so now is a great time be putting part of your salary aside into a pension plan.
A company pension plan is especially appealing because it essentially acts as a pay rise. If your company has a scheme in place, they will start making contributions on your behalf based on the percentage of your salary that you decide to save. If you don’t take it, you’re effectively turning down free money.
Make an Investment in Property
If you have already invested in property, this will go some way to help you afford later life.
If you haven’t yet invested but it’s viable to do so, then you should definitely consider it. A property is a really lucrative asset to have when the cost of retirement looms, particularly if at some point you need to move to a care home.
Delaying purchase until your 40s means that you’re in danger of on-going mortgage repayments into your 60’s and possibly even your 70’s. However, the state pension age for women is due to be brought into line with men at 65 in 2018 before rising to 66 by 2020 and 67 by 2028, so if you invest now, there’s still time to arrange for the mortgage to be paid in full by the time you hit retirement.
Don’t bury your head in the sand.
Yes, your 40s are regarded as late for starting to save for retirement, but always better to be late than never. You’ve still got plenty of working years ahead, so can still afford to make investments and build up a tidy nest-egg.
Secondly, don’t panic. If you know that you don’t have the time and resource to save for every eventuality in later life, you’re not doomed. In some circumstances, the government are legally obliged to pay care home fees on a person’s behalf. Through the NHS Continuing Care program, the NHS will fund the full cost of care, including accommodation and nursing costs if ill-health is the primary reason for entering a home.
This article was contributed by Laura Moulden on behalf of Cheselden. Visit the website to find out if you may be eligible for a care fee refund.