Being 40 is really not something we can even comprehend when we are in our 20s, even in our 30s we still like to totally avoid the concept of getting old. But here it is! The 40th birthday party has been and gone, the hangover that takes twice as long to dissipate these days has finally left and being 40 is becoming almost normal. But while we focus on keeping fit, eating better and enjoying our blossoming career we should also be seriously thinking about financial planning. However boring this may sound retirement and the potential for…well, for dying, gets more real and being 40 is the perfect time to address it with plenty of time to do it right!
Financial planning can include a range of different products and activities. Here are just a few of the big ones that are relatively easy to get going and that could help you and those around you later in life…or death.
“Shhh, don’t talk about dying! “ – This is the natural response to any kind of conversation like this but we really need to be a bit more grown up about it. Dying is literally the most natural thing in the world and it will happen. We all have views on it but the reality is irrefutable. So, the important thing is to make sure it doesn’t leave those around you suffering more than needed. A funeral plan is a very simple product that basically allows you to pay for your funeral upfront. It also allows you to plan it all out so your loved ones simply have to call the company and let them know when it’s time. You can pay in a lump sum or in instalments and once it’s paid for you can relax knowing everything is arranged. Your family will be grieving, they should not be trying to work out how to find a few thousand pounds to cover your funeral and working out all the details. As with all money products there are good ones and bad ones and downright dodgy ones. Luckily the funeral planning market is overseen by the Funeral Planning Authority who have a huge list of approved providers as well as offering tonnes of useful info. It is advisable to only use a registered FPA provider when looking at pre paid funeral plans.
It is odd that the word “pensioner” still conjures up images of an old person getting on a bus in Hush Puppies, but the reality is that being a pensioner should be fun and it should be a part of your life that’s filled with holidays and doing things without kids around! However, it will only be fun if you have a pension. The state pension is designed to support people, but it is certainly not designed to pay for a Cruise around Norway. Employers now have to provide a workplace pension but not every opted in or has an employer, freelancing and running businesses is becoming more and more common. If you do have a workplace pension being 40 is a massive green light to put more in than you did before, put in as much as you can. If you do not have one, then a private pension may well be a good move. They are not cheap, nor are they 100% safe, but very little is when it comes to money. But, they do offer the chance to have a solid income when you retire. If you earn £60k you would want to look for a plan that gives you £30k a year to keep a similar lifestyle. Here is a useful guide to how it might work https://www.moneywise.co.uk/news/2017-08-08/even-your-40s-you-can-start-saving-100000-pension
This one is really simple; get saving! While interest rates are not great putting money away each month will do you no harm at all and may well provide a useful, easy access back up for later in life. It might be for a house move or just a fall back for any emergencies your pension simply doesn’t provide enough to cover. Saving is easy and it is something everyone should be doing.
Most people at 40 will own a property but if not then it is probably the best time to go for it. Buying property generally leads to some equity over time in most parts of the UK. Low interest rates work well for mortgages and with a bit of hard work and a shrewd view on buying in the right locations your property may well be a solid retirement plan in itself. When you want to retire downsizing can free up some cash that may well boost those savings very nicely. Going for something big when earnings are high is also wise but never overreach to the detriment of pension and savings contributions.
It may not feel like much fin now but when you come to cash all this hard work in you can sit back smugly knowing you and you family is looked after. If you then choose to spend all your money on Hugh Puppies that is entirely your prerogative.