Your 50s can be a time of change in many areas of your life. This is usually the decade in which you have the greatest level of financial responsibility, and you might be starting to think about your retirement plans too.
Far from being the traditional “hard stop” of previous generations, retirement today can look different for everyone. While this flexibility has its benefits, it also means that planning your retirement may have an additional level of complexity. This, combined with the financial responsibilities you may have acquired, means that managing your money can be especially challenging at this stage of your life.
Read on to find out more about why your finances could change in your 50s and how our team of financial planners in Lewes can help.
1. You may have adult children that you are still supporting financially
In your 40s and 50s, your adult or young adult children may no longer need the day-to-day care that they needed at younger ages. But that’s not to say that they will be entirely independent.
The Office for National Statistics (ONS) reports that between 2011 and 2021, the number of over-18s who were living with their parents rose by 14.7%, to 4.9 million. Additionally, more than 1 in 10 adults aged 30 – 34 were living with their parents. The most common reason for adult children living at home was because they couldn’t afford to buy property of their own.
In a separate study, Aldermore found that 29% of parents have dipped into their long-term savings to provide financial support for their adult children.
Supporting your children may be a top priority for you, but don’t forget your own financial needs in doing so. If you’re dipping into savings to support your children, this could mean that you have less set aside for your retirement. So, it’s important to find a balance between financially supporting those you care about and saving towards your own future plans.
2. Your parents or other family members may require additional help
The ONS found that, of all the people who provided unpaid care in 2021, 26% were in their 50s. People aged 59 were the most likely to be providing unpaid care to a partner, parent, family member, or friend because of a long-term health condition.
So, there is a chance that you may need to factor in providing care to your parents or other family members during your 50s. This can have an impact on your finances, particularly if you need to reduce your hours at work to meet your family member’s needs.
Carers UK reports that 75% of unpaid carers who are in employment worry about balancing their caring responsibilities with work. On average, 600 people leave employed work every day to be a full-time unpaid carer.
As well as reducing the amount you can earn from income, leaving employment to provide unpaid care could mean that you miss out on vital pension contributions to save towards your retirement. If you decide to provide financial support to the person you’re caring for, you might also deplete your own savings more quickly than anticipated.
As you can see, while caring for a loved one may be necessary and rewarding, it can have a negative impact on your finances, especially in the run-up to retirement.
3. You may be starting to think about retiring, or stepping into a phased retirement
As well as supporting family members and navigating your own priorities, you might be starting to think about your retirement as you enter your 50s. The good news is that, today, you have much more choice about how you’d like to transition from working to retirement, compared to previous generations.
The traditional “hard stop” retirement is no longer the norm. According to a report from Aegon about the “second 50”, only 27% of people currently in employment expect a hard stop. The report suggests that your second 50 is more likely to be multi-staged than it was for previous generations. Perhaps you’ll phase into retirement by reducing your hours or setting up your own business or consultancy before stopping work entirely.
One of the key findings of the Aegon report was that, though life expectancy is increasing, the number of years that you’re likely to be fit and healthy isn’t. On average, people in their 50s expect to spend around a fifth of their retirement in ill health. So, it’s important to factor in the possibility of needing later-life care.
Whether you choose a phased retirement or a hard stop, planning early is key to making sure you have the best possible chance of achieving your goals.
Your financial planner can help you to manage your finances in this new chapter
There’s no doubt that life after 50 can become complicated. As well as supporting those around you, it’s important to manage your own finances carefully so that you can continue to work towards your goals.
Fortunately, your planner is here to help. We can offer support in the following ways to help you manage your money.
- Creating a realistic budget that allows you to save for the future alongside your current commitments
- Monitoring your investments and rebalancing your portfolio where necessary so that your money has the greatest chance of growing
- Boosting your tax efficiency so that you can make the most of your allowances and put more of your income towards achieving your goals
- Having regular reviews so that you can tweak your financial plan if your circumstances change.
With a financial planner to rely on, you can feel more confident in your ability to support those you care about without jeopardising your wealth or your future plans.
Get in touch
Our team of independent financial advisers in Lewes is here to support you in managing your finances at every stage of your life.
To find out more, please get in touch by emailing us at financial@barwells-wealth.co.uk or calling us on 01273 086 311.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
The Financial Conduct Authority does not regulate tax planning.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
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