It is now time to wise up on age-old benefits
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It is said that like wine and cheese, some things get better with age. I’m never sure whether money-saving skills fit that criteria. In any case, a range of new financial challenges open up as you get older.
But don’t think there’s nothing you can do. For the over-50s, it’s crucial to get on top of the changes.
ALL CHANGE FOR ANYONE NEARING RETIREMENT
In the Budget, the Chancellor announced sweeping changes to pensions. From 2015, no-one will be made to get an annuity, the product you buy to convert a pension pot into a regular income for life.
From 2015, at the age of 55, you will be able to take 25 per cent off your pension savings as a tax-free lump sum. You can then access the rest when you need it but you’ll pay tax on that. For many, this flexibility is a boon. Yet the danger is that some will use money up too quickly.
Retiring between now and then? Never just take your pension company’s offer rather than finding the best rates — you’ll lose out each year for the rest of your life. So amounts can be huge, for instance, £11,000 lost on £100,000 over 25 years.
You now also have the choice of waiting to draw down. If you do get an annuity (which isn’t wrong for everyone), you can’t change your mind. If you don’t know what you’re doing, get independent financial advice.
AS YOU GET OLDER, A HOST OF ENTITLEMENTS BECOME YOURS
This includes bus travel for the over-60s (62 in England) and free Tube and bus travel for Londoners. You’re also entitled to a Senior Railcard which costs £30, but gets you one-third off rail travel. Over-60s also get free prescriptions in England (in the rest of the UK you don’t ever pay anyway).
If anyone in your home is aged over 75, you can bag a free TV licence for the whole house. You would be surprised how many people don’t know this, as one woman emailed me the other day: “My husband had no idea he qualified for a free TV licence. Now we’re getting 3 years’ fees refunded for over £400.”
And if anyone in your home was born before January 5 1952, you are entitled up to £300 in tax-free winter fuel payments. Plus anyone on specific income support, jobseeker’s allowance or pension credit gets £25 for every seven days it’s sub-zero.
FREE TRAVEL INSURANCE FOR UP TO 75-YEAR-OLDS
Older travellers get milked by insurers as costs rise outrageously. But costs don’t need to be huge. One trick is the no-fee Nationwide FlexAccount, which includes annual travel insurance if you’re aged 74 or under.
You will need to properly switch your bank account to it to get it though, and you need to pay in £750 per month income to qualify.
If you don’t fancy that, then prices vary greatly with age. At 50, the cheapest single traveller annual policy with reasonable cover levels is £15 in Europe, by 70 it’s £56 and by 85 it’s £276. With all these policies and the banks, do ensure you declare any pre-existing medical conditions.
OVER-50S’ DISCOUNTS & FREEBIES
B&Q, Odeon, Specsavers... Age has its privileges. There’s a free over-50s’ dining card for meal deals at over 100 pubs and carveries.
Over-60s get 25 per cent off Specsavers, 10 per cent off B&Q, cheap cinema tickets and more.
In fact, my tip is (this works better for pensioners): if they offer a student discount, try asking for a pensioner one too. They can only say no.
HAVE THE ‘UNPLEASANT ISSUES’ CHAT, INCLUDING LOSING YOUR FACULTIES
Hopefully, you will live healthy and happily for many years. But in case problems arise, it is best to deal and communicate sooner and openly with your family.
One in three over-65s develop dementia. Unless you have a lasting power of attorney, which allows loved ones to take over your affairs, they need to apply in court, which can be hard and costly.
Yet don’t think that if you get a power of attorney you need to give up control now, you can put it in place in case you lose your faculties.
Unlike dementia, death is certain. We will all die, and it is important to plan for it. This includes making a will so your assets go where you want. Discuss your preferences for funerals and care with your loved ones, and plan inheritance tax if you’ve assets that take you over the £325,000 threshold.
Compile a financial factsheet with info loved ones can access. If you are in a couple where one of you looks after all the finances, this can risk the other being left in the lurch if something happens.
So list down all the products you have, whether cards, breakdown, mobile, insurance or investments (without too much security info) and put it somewhere safe that you both know about so you’re not the sole source of info.
ARE YOU MISSING OUT ON UP TO £35 PER WEEK PENSION CREDIT?
The full state single pension is £110 per week.
However, if your total income is under £145 per week, or even if you have some savings, you may be entitled to a top-up with pension credit.
I suggest that you call the Pension Service helpline to find out if you are entitled to the top-up on credit.