Women usually take the lead in household finances, paying bills and drawing up a budget, but research shows we are still not making big life decisions and are at risk when major midlife changes strike.
If you’re in a longstanding and happy relationship and never run into financial trouble, it can be tempting to leave your finances as they are.
But divorce, widowhood or the responsibility of caring for children and elderly parents can derail your finances when you least expect it. Your 50s, when you’re still likely to be healthy, earning a wage and contributing to a pension, is the crucial decade to make sure you are in charge of your personal finances to ensure you are in a strong place for the decades ahead.
Our checklist, devised with financial planning experts, reveals the seven most important things you should have in place once you hit this milestone age. ‘Women who engage with long term finances feel more resilient, comfortable and in control of their financial future,’ says Claire Trott, of wealth management group St James’s Place.
If you can check off all seven financial accomplishments in the list below, you’ll be far better prepared for anything the future throws at you.
1. Keep own savings and current accounts
If you’re married, it’s likely you and your husband’s finances are intertwined – especially if you’ve been together for decades.
Women in their 50s are more likely to have joint current and savings accounts than younger women.
Setting up new savings and current accounts is simple and free, though talking about financial change as a couple might be harder
There are clear benefits to having a joint account – it makes paying the bills much easier for one. But it’s important that you keep your own current and savings account, too.
This will give you more autonomy should you ever need it.
Most joint accounts allow one party to empty the entire account without the other’s permission, which could leave you in a difficult position if something goes wrong.
As a woman, you’re more at risk of financial abuse, with one study from the University of Manchester showing that around 30 per cent of women had experienced some form of financial control from a partner.
This is a form of domestic abuse that involves someone controlling another person’s access to money and their spending as a form of power over them.
‘If you’re unhappy, then having savings gives you options,’ says Helen Morrissey, head of retirement at wealth platform Hargreaves Lansdown.
Setting up new savings and current accounts is simple and free, though talking about financial change as a couple might be harder.
Separate accounts also help you to cut your tax bill as both you and your partner will have your own tax-free allowances.
Everyone can save up to £20,000 into a tax-free Isa each year. Basic rate taxpayers can earn up to £1,000 in interest on cash savings, while higher rate payers get a £500 allowance. Additional rate earners receive no allowance at all.
2. Have a full set of NI contributions
The state pension is the bedrock of most retirements. It rises each year by the highest of inflation, wages and 2.5 per cent under the triple lock and is available for life, unlike most modern pension provision.
The only catch is that you must have a full record of contributions to national insurance to ensure you get the full amount every year.
To receive any state pension at all you need 10 years on your record, while you need 35 years to receive the full amount of £241.30 a week.
If you are in your 50s, you have time to fill any gaps or top up your NI contributions and fix shortfalls.
Start by checking your state pension forecast on the Government’s website, to see if you are on track to receive the full weekly payout
Start by checking your state pension forecast on the Government’s website, to see if you are on track to receive the full weekly payout, at gov.uk/check-national-insurance-record or by contacting the Government’s Future Pension Centre on 0800 731 0175.
This may tell you, for example, that you are already going to get the maximum state pension and therefore don’t need to make any voluntary contributions, even if you have some gaps in your record.
If anything on your forecast looks wrong, such as if there are any missing contributions in years when you were working or caring, you can query it.
You should check to see if you qualified for a benefit that comes with a National Insurance credit at that time. Examples include child benefit, jobseeker’s allowance and universal credit.
If you have missed out, see whether you can claim them back by visiting gov.uk/national-insurance-credits as the method may vary depending on the period you’re claiming for.
3. Get up-to-date wills and attorney powers
More than half of adults don’t have a valid will. That means that if they die suddenly, their families won’t always receive what has been earmarked for them.
This can lead to arguments and larger tax bills than necessary.
While you can use a DIY pack from a stationer to make a will, or an online service like Rocket Lawyer, using a solicitor or will writer can ensure that your will is legal and less likely to be contested.
It is crucial that you make sure it is witnessed properly.
Along with a will, setting up lasting powers of attorney (LPAs) can be vital. This is a legal agreement in which you appoint a loved one to make key decisions regarding your finances and healthcare on your behalf if you cannot do so.
Ms Morrissey, of Hargreaves Lansdown, says an LPA is ‘one of the most important documents you will ever fill out’.
There are two types of LPA, each with a separate application form, which you can find on the Government website at gov.uk/power-of-attorney/make-lasting-power. The process can be complex and take eight to ten weeks.
The average credit limit for all credit cardholders is just under £6,000 – enough to deal with most financial emergencies
One for ‘property and financial affairs’ can be used as soon as it is registered, with your permission. It gives your attorney power to, for example, pay your bills or manage your bank account.
You can choose whether to enact your financial LPA immediately, so someone can deal with your financial affairs straight away, or only if you are unable to do so yourself, while a health LPA will never be used unless you are incapacitated.
4. Get an emergency high-limit credit card
Discipline with credit cards is essential – but having one available to get you out of a hole can be useful.
The average credit limit for all credit cardholders is just under £6,000 – enough to deal with most financial emergencies. Keep this credit card clean and unused if you can – some people even store their emergency card in water in the freezer if they’re tempted to use it for everyday spending.
If you do need to spend on it, make sure you have a plan to pay the money back before the bill comes due, or can shift the debt on to a 0 per cent balance transfer credit card so you’ve got more time to pay it off without paying exorbitant interest.
5. Have a spreadsheet with all pensions on
You’ve probably worked for several companies and it’s easy to lose track of all your pension money.
There are 3.3 million lost pensions in the UK and the average pot is worth almost £10,000, according to research by the Pension Policy Institute.
Making the spreadsheet is a one-off job. Sit down and write out every job you’ve ever had. If there’s even the possibility that you paid into a pension in that job, write it into the spreadsheet.
You know where that pension is and have been receiving annual documentation on it? Great – mark it in. If you don’t, visit the Pension Tracing Service at gov.uk/find-pension-contact-details to find contact details for your old employer and its pension trustees.
Contact them to ask if they have an old pension of yours. Remember to give old names and addresses you’ve had when inquiring. Once you’ve got details of all your pensions and their values, update the spreadsheet every year to know what you’ve got – and where.
6. Have an idea of ‘your number’
Everyone needs a different amount of money to live on in retirement – if you’ve always imagined a life of travel and haven’t paid off the mortgage, you’ll need a lot more than someone who is happy with a frugal life at home.
The Retirement Living Standards estimates a single pensioner now needs £32,700 a year to achieve a moderate lifestyle, while a couple would need a combined income of £45,400 a year
Consider how much income you think you’ll need in retirement and try to come up with ‘your number’. The Retirement Living Standards, a guideline set by Pensions UK and used by the pensions industry, can be useful markers.
It estimates a single pensioner now needs £32,700 a year to achieve a moderate lifestyle, while a couple would need a combined income of £45,400 a year.
Check on your pensions to see how they are expected to grow. Once you know the value of all your pensions and projected state pension, a calculator like the one offered by pension provider PensionBee (pensionbee.com/uk/pension-calculator) will give you an indication of whether you’re on track for your dream retirement.
In your 50s you’ve got time to grow your pension by upping your savings. If you have been automatically enrolled into a workplace pension, you will be paying at least five per cent of salary into your pot monthly, while your employer will typically pay three per cent.
Check if your firm will match your monthly contribution. If you can afford it, increase the total you pay in. Not only is this a tax-free way of saving, you may be able to save on National Insurance if your firm offers salary sacrifice.
7. Hold investments in your own name
Over the long term, investing in the stock market usually leads to far larger returns than leaving your savings in cash.
But older women are far less likely to invest than older men. Women are also 50 per cent more likely to feel apprehensive about making investment decisions.
But when women do invest, they typically do better than men. A study by Warwick Business School has shown that women outpace male investors by nearly two per cent every year on average.
Holly Mackay, at Boring Money, says: ‘Start with a stocks and shares Isa: you can open one online in 10 minutes with £50. Once set up, you choose what to invest in, with some banks and online advisers offering recommendations based on your goals.
‘Find a simple collection of investments that is spread widely. Beginners should look for one simple investment solution that is well diversified.
‘Investment platforms Monzo and JP Morgan Personal Investing have decent options, or Moneybox has a nice round-up feature that allows users to invest spare change. Once you’ve started, set up a direct debit so you’re growing your wealth over time.’
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