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Financial Planning for Retirement

There's a lot of doom and gloom surrounding the financial plight of pensioners. However, it is possible to manage the financial implications of retirement, and the sooner we start to think about this, the better. Here are some tips for ensuring that our senior years are as comfortable as possible.

According to Mintel, the market research group, hundreds of thousands of people are heading into retirement still burdened by mortgages that have a number of years to run and owing thousands of pounds on their credit cards.

The situation is only likely to get worse as people find that their endowment mortgages aren't stumping up the money needed to pay off the debt, and as the baby-boomers, in effect the first credit card generation, carry unprecedented levels of personal debt into their twilight years.

Add into the recipe the ballooning cost of care for the old folks in their retirement homes and the inheritance implications of that. Mix in the spectre of a possible steep fall in house prices as a glut of baby boomer family houses come onto the market. Season with the diminishing likelihood of any of us making it to retirement without at least one change of employer (and the impact that might have on our pensions).

Add a dash of reduced pensions in the light of disappearing final salary schemes. Et voilà, there's no cake so we can't eat it! And that's not to mention growing numbers of people who are remortgaging their homes to give their children a deposit for a house or to pay university costs.

Look, I'm sorry if you're now feeling like you've just emerged from a trendy cinema that had no air-conditioning and the standard uncomfortable seats, having endured a particularly depressing subtitled trilogy by a Polish film director with a cheerless world-view and an unpronounceable name. (I know what you're thinking, and yes, my ability to tap into the emotional Zeitgeist is uncanny.)

Before you mentally move me from the file marked 'purveyor of brilliant ideas' into one called something like 'self-deluding gloommeister and writer of books you regret buying', take heart: there are steps you can take to ward off the future depicted above. When it comes to facing retirement, forewarned is forearmed. So if you are still some way off of retirement, make a note in your diary to look at your finances at least five years before retirement and, if you can, start a serious campaign to pay off as many debts as you can.

By the way, you might want to start thinking about inheritance tax implications, especially if you are one of the fortunate few who could deliberately increase their mortgage in retirement because you want lots of debt to put against the value of their estate for inheritance tax purposes.


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