It's important to grow old thriftily
The older you are the more your cash needs to look after you. With many "older" households struggling, prevention is better than cure. Here are 10 crucial tips for the over 50s.
● Never just take your pension company's offer. If you have been saving money in a pension, at retirement it is likely you will need to buy an annuity. This is where you trade your pension pot in for a regular income, usually until you die.
● Never just go for your own provider's annuity. You have a legal right to buy elsewhere so always ensure you compare as many as possible. With an annuity costing £100,000, the best can pay £900 a year more than the worst, and if you live over 25 years, that is £22,500. This is one of the times that I am a big fan of Independent Financial Advisers.
● Free cash to improve your home. £1,000s are available for help with home improvements. Lots of companies are currently doling out up to £300 of free cavity wall and loft insulation to anyone. Try the www.energysavingtrust.org.uk grant finder, or call it on 0800 512 012.
● Annual travel insurance can be £30. If you are travelling within Europe the first step for travel insurance is to ensure you have an EHIC card via www.ehic.org.uk. This gives you access to state-run EU hospitals at the same cost as a local. If you already have one, check it is still valid.
● Travel insurance does not need to cost a fortune. You can get an annual policy that covers an entire year's worth of trips. If you are aged 50-60, you can get £20-£45 annual cover. If you are older, prices go up but even those in their 70s can get annual policies for around £100. Full breakdown at www.moneysavingexpert.com/travelinsurance.
● You can boost the state pension. Don't assume that your state pension will be a fixed sum that you have no control over. There are ways to boost it. For some people spending a few hundred pounds to make up for missed National Insurance payments can add up to many thousands in their pockets over the years.
If you are fortunate enough not to need your state pension immediately, consider deferring. For every five weeks you delay taking it, your future weekly allowance increases by one per cent. It is worth investigating.
● Have the "unpleasant issues" chat. Hopefully you will live happily to 120, yet there is a chance you won't. The sooner you deal with what will happen, the better.
● Sort out a will. These can be free via charities if you bequeath, and organisations like Which? have cheap services. Prepare a financial factsheet with info for your family such as insurance provider, mortgage, savings etc. If you have a lot of assets do an inheritance tax plan.
● What if you lost your faculties? One in three of us die with dementia. If you lose mental capacity, unless you have a Power of Attorney, loved ones may face a costly legal battle to help you. Don't think signing one means you instantly give up control. It can just be ready to use if and when you need it. Forms at http://www.direct.gov.uk.
● Take advantage of age-related freebies. There are a wealth of freebies and discounts for silver savers, including bus passes, prescriptions, and deals from the likes of B&Q, Specsavers, Odeon and more.
● Don't miss out on pension credit. The full state single pension is £102.15, yet if your total income is under £137 or even if you have some savings, you may be entitled to a top-up above that. Call the Pension Service on 0800 99 1234 to talk about it.
● Don't be loyal to gas and electricity companies. You could switch and save more than £300 a year. Switching is easy. Only customer service and your billing changes. To compare, use a www.consumerfocus.org.uk approved comparison site, or go to them via www.moneysavingexpert.com/gaselec - then you get cashback of up to £30 or a crate of wine on top. Or you can call Uswitch on 0800 051 5493 or Energylinx on 0800 849 7077.
● Equity release is not a no-brainer. If you own your home but have little income, equity release loans are sold as a way to spend its value while living there. Yet while rates sound similar to mortgages, as you don't make monthly repayments, the interest compounds fast. Take £20,000 when you are 65 and your dependants face a bill of £100,000 if you die 25 years later.
The best way to release equity from your home is usually to sell it and downsize. Many people plan to do that "later on" when in their 50s and 60s, but by the time they get round to it, anecdotally at least, it seems too difficult. So if you are going to do it, do it early. If you must equity release talk to an independent mortgage broker about the options.