In the last instalment in our series we look at some of the financial mistakes for you to avoid in your fifties to ensure you're best positioned to settle down and enjoy your retirement when the time finally comes.
As you get out of your forties and into your fifties the thoughts of retirement start to move from the abstract into reality.
So whether you want to go travelling, finally sit down and write that book, or get really into those ships in bottles, we're going to run over some common financial mistakes so you know what pitfalls to avoid in your sixth decade.
1) Overpaying the mortgage
When you get into your fifties the concept of paying off your mortgage will start to edge closer to reality. And the anticipation of finally becoming mortgage free can cause a natural inclination to try and pay off as much of the mortgage as possible.
However this can sometimes be a mistake.
If you have other loans or debt, the chances are it will have a higher interest rate than your mortgage, so it's advisable to pay this debt off first as you'll pay less interest in the long run.
2) Not preparing for illness
Regardless of what decade of life you're in, being prepared financially for an illness is sound advice.
But more than ever, when you are in your fifties you need to be vigilant, as you're more likely than ever to be sidelined from work because of illness.
Recent research showed that 40% of people don’t have a plan in place for an unforeseen illness.
So if you are in your fifties it may be worth looking into insurance or building up an emergency nest egg to cope with unforeseen medical expenses.
3) Saving for retirement like a 20-year-old
If you are closer to 60 than you are to 30 then you shouldn’t be saving like you are in your first job.
So if you are in your fifties it may be time to review your pension to ensure you're on track for when you finally stop working.
For a lot of people, your fifties are when your earnings are at their max, but also when your expenses start to drop off as your children finish school and college and become financially independent. This means your ability to save for a pension peaks around this time - so use it wisely.
4) Not updating your will
If you have followed our previous articles you should have looked at writing a will in your forties.
It is important then in your fifties (and sixties for that matter) to review your will to see if it needs to be updated based on changed financial or personal circumstances.
Of course if you haven't gotten around to writing a will then now would be a good time to start.
5) Not focusing on your health
Up to now, we haven't delved into something we often overlook when it comes to finances, and that’s your health.
When you get to this point in your life you needn't be reminded that you aren’t as young as you used to be. So this is a vital time to be extra conscious of your health and diet, as it can affect your earning power.
So keep exercising and dieting well. After all - what's the point in working for so long if you aren’t well enough to enjoy the rewards of retirement?
6) Letting your life insurance lapse
As your kids get older and you pay off your mortgage, you might think that you no longer need insurance. But this isn't always true.
Most serious illness claims (an insurance policy which pays out a tax-free sum of money if you're diagnosed with a serious illness) are to people in their 50's, so if you have a policy, don't let it lapse without taking good advice. You never know when you might need to use it.
Also, kids these days are a financial burden on parents for far longer. Not so long ago, a child would be considered financially independent once they'd reached 18 or 21 maybe. Now it's more like 25. So review your cover to ensure you're not underproviding for your family, particulary if you have young kids.
7) Not switching health insurance
When it comes to motor insurance we're never afraid to ring around to find the best deal for ourselves and switch insurer if we have to.
But for some reason this willingness to switch doesn’t extend to other forms of insurance.
So it's no surprise that recent research, carried out by TotalHealthCover.ie, has found that two out of every three health insurance members are potentially on the wrong health plan because they haven't shopped around for better value cover recently.
Older customers in particular are often reluctant to switch (and are therefore overpaying) as they're afraid they'll have to serve a waiting period in the event of a claim (you won't) or that they won't be covered for pre-existing conditions (you will - as long as you already have a policy that covers the treatment).
You also can't be penalised by other insurers for prior claims if you switch.
So if you're planning to have hip replacement surgery tomorrow, you can switch from insurer A to insurer B today, and insurer B becomes liable for the cost of the procedure.
On the key issue of cost, Mr. Goode warns that many older plans in particular are outdated in terms of what they cover and can offer poor value. As a result, the potential savings for shopping around can be huge, which is why it's important to review your health insurance cover every year, just like you would with car insurance, and to not be afraid to switch, even if you're older.
bonkers.ie compares plans offered by all the major health insurance companies such as Irish Life Health, Laya Healthcare and VHI. We'll provide you with a whole-of-market health insurance comparison for just €125 and help you to find the best plan on the market for your personal needs.
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Are you in your fifties? Have you any other tips for managing your money? Get in touch with us and let us know.
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