Angelica Bell: Hello and welcome to Rewirement, the podcast where we help
Angelica Bell: you make the right connections to create your brightest financial
Angelica Bell: future. Brought to you by Legal & General. I'm Angelica Bell,
Angelica Bell: and I'm on a mission to find answers to your
Angelica Bell: questions about money and how to manage it. I'm carrying
Angelica Bell: out my mission by finding people with real issues who
Angelica Bell: are looking for real insight, and then pairing them up
Angelica Bell: with an expert who can help. Even better we get
Angelica Bell: to listen in to their conversation and, we hope, learn
Angelica Bell: a whole lot more at the same time. Today we're
Angelica Bell: talking about something that I suppose is at the heart
Angelica Bell: of pretty much every question you can ask about managing
Angelica Bell: your finances. How do you balance the demands of today
Angelica Bell: with making sure that you'll be financially secure tomorrow? We
Angelica Bell: know that we need to be planning for the future,
Angelica Bell: but we also need our money now, especially at the
Angelica Bell: moment with the cost of everything going up. Plus, we
Angelica Bell: want to enjoy our lives. We only get one today. Today
Angelica Bell: we're talking to two people who are trying to get
Angelica Bell: that balance right. First of all, let's say hello to
Angelica Bell: Beverly who's with me now. How are you?
Beverly: Hello, Angelica. I'm fine, thanks.
Angelica Bell: So thank you for being here. And I want to
Angelica Bell: find out a little bit more about you and your situation.
Beverly: Okay. I'm going to be retiring hopefully within the next
Beverly: 10 years. I'm a single mom, so I have a
Beverly: grown up child, but being single means that financially I
Beverly: have to be self sustaining.
Angelica Bell: Yeah.
Beverly: So for about five years I had a break in
Beverly: my pension.
Angelica Bell: Can I ask you about why you had a break?
Beverly: I was made redundant in 2016 from a company that
Beverly: I'd worked for for 16 years, and the plan was
Beverly: to just get another job. But then my parents became
Beverly: ill and I ended up being their main carer.
Angelica Bell: Mm- hmm.
Beverly: Unfortunately, both of my parents have now passed away. So
Beverly: now I'm back in the workforce and I'm looking at,
Beverly: okay, I need to look after me for the next
Beverly: 5 to 10 years and make sure that all my
Beverly: finances are in order, and that I'm planning and set up
Beverly: and living in my forever home. I live in Birmingham
Beverly: and I go into the office two days a week.
Beverly: My son lives in Bolton. I want my forever home
Beverly: to be closer to him and his family. So I'm
Beverly: looking for the funding that will allow me to have
Beverly: my forever home in the place where I want it
Beverly: to be, near my family.
Angelica Bell: So are those the key questions about how you can
Angelica Bell: supplement that shortfall?
Beverly: Yeah. How I can supplement or whether I need to?
Angelica Bell: Yeah.
Beverly: What am I going to do in the next 10
Beverly: years that's going to set me up ready for retirement?
Beverly: Because I don't want to be working till I'm 75
Beverly: or even 70.
Angelica Bell: Yeah.
Beverly: Everybody expects you to know the answers to these questions
Beverly: about your pension. Nobody ever teaches you anything, and nobody
Beverly: discusses pensions. Who goes to the pub and talks about
Beverly: pensions? No one does. It's knowing as well that there
Beverly: isn't anybody else that I can ask the questions are
Beverly: of or to fall back on.
Angelica Bell: Well, let's try and get some of those questions answered
Angelica Bell: for you Beverly. We found someone to help you tackle
Angelica Bell: some of those points you've mentioned. He's called Phil Anderson
Angelica Bell: and he has his own financial services company bait in
Angelica Bell: Scotland. So we got you two together, and let's have
Angelica Bell: a listen to what happened.
Beverly: I'm just wondering how important is it on a scale
Beverly: of 1 to 10. 10 being really, really desperately important
Beverly: that I keep my payments up and I make up
Beverly: that shortfall. 1 being, nah it doesn't matter, just carry
Beverly: on as you are. It would be good to have
Beverly: some kind of indication.
Phil: To answer your question on the scale of 1 to 10, I would go for
Phil: an 8. And should maybe be going for a higher figure
Phil: than that. But I know, like you say, you've got
Phil: to live for today as well. And especially with the
Phil: cost of living crisis, people are finding things harder. Bills
Phil: are going up a lot. But you also have to
Phil: be mindful for your future as well. And I would
Phil: say great you've got your contribution going in, your employer's
Phil: contribution going in. But I would definitely say if you
Phil: can afford to pay more in, because it's such an
Phil: important thing. And if you've missed five years payments, what
Phil: I would do is try and work out and say, "
Phil: Right, how much have I missed going in?". And then
Phil: you can also look at it and say, " Right, had that money
Phil: gone in that would've grown as well". So you've got
Phil: that almost compounding effect on things, you've missed out on
Phil: that. So although it's maybe five years payments that's been
Phil: missed, in real terms it's probably more than that because
Phil: you've not had the growth on that money either. So
Phil: sometimes you have to make sacrifices to do that.
Beverly: So my next question is, how do you calculate how
Beverly: much you're going to need in your pension pot?
Phil: One financial advisor that I know, she often says to
Phil: people that if you want an income of 20,000 pounds when
Phil: you retire, you better have a pension pot of 400, 000.
Phil: So she uses a figure 20 times that amount. That's
Phil: something I've seen some advisors do in the past. Some
Phil: people will spend a lot when they retire, others will
Phil: spend a lot less. What I do is I'll say to someone, "
Phil: Let's have a look at your ins and outs now,
Phil: but also let's have a look at your ins and
Phil: outs once you retire. Because at that point you might
Phil: have less commuting costs. Your mortgages likely have been paid
Phil: off. Would you look to downsize on the house?". Again,
Phil: that's almost a good reason to review your finances regularly
Phil: as well, I would say.
Beverly: I did it in a very simplistic way in that
Beverly: I just took the figure of 20 years, divided my
Beverly: pension pot by 20 years to see how much that
Beverly: would leave me. At the moment at the current cost
Beverly: of living, I could survive on that comfortably, not with
Beverly: a huge margin. So there'd be no Caribbean holidays or
Beverly: anything, but I could get by. I could treat myself
Beverly: to nice food. I could go into White Rose and
Beverly: get something really nice a couple of times a week.
Beverly: It was a very simplistic way of looking at it.
Beverly: But I think from what you're saying is so long
Beverly: as I've got my finances organized and I can live
Beverly: within that amount, then I should be okay.
Phil: Yeah. One of the great unknowns is nobody knows how
Phil: long they're going to live for, and that makes it
Phil: harder to kind of plan for things. And we can
Phil: only go on averages and say women live longer than
Phil: men, so in theory women should really have bigger pension
Phil: pots than what a man should. It's all got to
Phil: be individual and personalized for yourself and no two people's
Phil: retirement's going to look the same.
Beverly: Because one of the questions I was going to ask, at my age,
Beverly: what I need to think about or what I think
Beverly: I need to think about is where I'm going to
Beverly: have my forever home. Now at the moment I work from
Beverly: home three days a week and I work from London
Beverly: two days a week. My son lives in Bolton, so
Beverly: I want to be near where he is and where
Beverly: his family are. In a common sense world I would
Beverly: move towards London nearer to where I need to commute
Beverly: to, but I can't afford to live in London. So
Beverly: if I'm going to move anywhere, it's going to be
Beverly: nearer to where my son is where I hope to
Beverly: have my forever home and to finish my life nearer
Beverly: to him. But to do that, I will need some
Beverly: additional finances other than the money that I make from
Beverly: selling my current house. Is it ever a good idea
Beverly: to dip into pension funds to contribute to buying somewhere?
Phil: It's something that I've seen a lot of people do
Phil: in the past, and for some people it's the right
Phil: thing to do because it helps them to buy their
Phil: forever home. What I would say is if you're taking money
Phil: out of your pension pot, that's going to impact on
Phil: your retirement income. So let's say you take a lump
Phil: sum of 50,000 pounds out to use that for a
Phil: home just now, if you've got 10 years until you
Phil: retire, things can be a bit up and down at
Phil: times, but over a longer period of time your investments
Phil: are going to grow. That 50,000 pounds if it does
Phil: okay, that would then be worth maybe a 100, 000 pounds in 10 years times.
Phil: So by taking the money out now, that is going to
Phil: impact on things in the future. Another option might be to
Phil: look at financing things with a mortgage. I know the
Phil: older someone gets the harder getting a mortgage can be,
Phil: but there are lenders out there that will allow you to take a mortgage term
Phil: up to say age 70. There's some that'll allow you
Phil: to go up to age 75 as well. One thing
Phil: that may be an option that a lot of people
Phil: aren't aware of is you get something that's called a lifetime
Phil: mortgage. Now the way that works is that type of
Phil: mortgage is usually designed for people over the age of 60,
Phil: usually over 65 plus. But let's say you were age 66,
Phil: at that point you can take out this lifetime mortgage
Phil: and they would allow you to borrow somewhere in the region or up to about 41- 42% of
Phil: the value of the property. You don't physically make a
Phil: monthly payment at that point. The interest rolls up against
Phil: the value of the property, and then usually when someone
Phil: dies or goes into long term care at that point that's when
Phil: that type of mortgage gets repaid. So that may be
Phil: an option for you somewhere down the line as well.
Beverly: That's really good advice, because one of the questions I
Beverly: had was around how far do I sacrifice the life
Beverly: that I have now for the life that I might
Beverly: have? And that has so many implications, so many ramifications.
Beverly: And it's such a difficult question to answer.
Phil: One exercise that I always say to people to try is get three sheets of A4 paper. On
Phil: the first sheet, write down where you are now. You
Phil: can do this for more than just your finances. So
Phil: for me I do it and say, " My height is
Phil: this, my weight is this, the money I've got in
Phil: the bank account is this. I've got so much in
Phil: my pension pot". Write everything down. Any loans you've got,
Phil: credit cards. So that's on sheet one, where you are
Phil: now. On sheet two you write down where you want
Phil: to be. So you maybe think, " I want to have
Phil: a pension pot of X amount. I want to weigh
Phil: X amount". I go back to the weight cause I'm
Phil: overweight, that's the one I need to work on just now.
Phil: But on sheet two write down where you want to
Phil: be. And then on sheet three, write down what you're
Phil: willing to give up to get from sheet one to
Phil: sheet two. Because if you do what you've always done,
Phil: you'll get what you've always got. So that's always just
Phil: an exercise that I think is really useful for people
Phil: to try.
Angelica Bell: Well, it sounds like a good exercise to try there
Angelica Bell: from Phil. Beverly, how was the conversation for you?
Beverly: It was really positive. And I think the biggest takeaway
Beverly: from the conversation with Phil was that I know more
Beverly: than I think I did.
Angelica Bell: I think you do, and I think maybe it's giving
Angelica Bell: you that confidence to seek out what you want and
Angelica Bell: what's right for you and your family.
Beverly: Yes, definitely. And it's also given me the confidence to
Beverly: talk to other people about pensions as well. I'm going
Beverly: to be recommending the podcast to a number of friends
Beverly: who were asking me questions about what I'd learnt, what
Beverly: my plans are moving forward. And it's given me something
Beverly: I can pass on to my son as well.
Angelica Bell: Amazing.
Beverly: That conversation is something that I never had with my
Beverly: parents. So that's something really valuable that I can pass
Beverly: on to him.
Angelica Bell: Beverly, thank you so much for sharing your story with
Angelica Bell: us today. And good luck with getting that balance right,
Angelica Bell: I know it's not easy.
Beverly: Thank you.
Angelica Bell: Now our second person looking for help with their balancing
Angelica Bell: act is Lisa. Welcome to Rewirement, thank you for being here.
Lisa: Thank you.
Angelica Bell: So tell us a bit more about your story.
Lisa: In a nutshell, I sort of got to that age where children are
Lisa: about to go to university. Recently we lost my mom,
Lisa: which made you sort of think about priorities a little
Lisa: bit more I guess. Fairly average I would imagine situation,
Lisa: not a lot disposable income, lots of places it should
Lisa: be going.
Angelica Bell: Well our first guest Beverly also lost her parents. And
Angelica Bell: often it's when we lose people close to us, especially
Angelica Bell: unexpectedly, and also when it's a parent, it sort of
Angelica Bell: shocks us into thinking about our own lives and children
Angelica Bell: and the protection we've put in place or not. Wouldn't
Angelica Bell: you say?
Lisa: Definitely. Yeah.
Angelica Bell: So Lisa, tell me a bit about the kinds of
Angelica Bell: things you're looking to find out.
Lisa: I think it was looking to find out how to
Lisa: prioritize things originally. Should it be funeral planning, a will,
Lisa: financing my eldest for university, put a bit more back
Lisa: in your pensions, how to try and find some money to save. There's
Lisa: just so many different places that money should be going.
Lisa: And with the cost of everything going up, the amount of money
Lisa: left to go anywhere is getting smaller and smaller I guess.
Angelica Bell: Well Lisa, let's go back to Phil, because when it
Angelica Bell: comes to priorities he's a man with a plan.
Phil: Probably the best thing to do would be to list
Phil: the various priorities that you've got. So you'd mentioned about
Phil: the kids going to university, paying off the mortgage. And then maybe
Phil: even just put a number next to them and say, " This is my
Phil: number one priority. This is number two priority". You might
Phil: think life and critical illness cover, that's a priority. And
Phil: some of them will be equally as important as one
Phil: another, but it's good just to kind of see what
Phil: you think is most important to yourself. Then start saying, "
Phil: Let's work on this first, this one second" and kind
Phil: of base it from there.
Lisa: I suppose it sometimes you do, whether you do it on what
Lisa: you think you should be doing or what's actually the
Lisa: most immediate problem. So I think part of me is going, "Actually I should get
Lisa: a funeral plan because I'm this age now and it's going to be
Lisa: cheaper if I do it now". And the other part of me is going, "He's going to
Lisa: university in September". So they both seem to be top
Lisa: priorities. Both of my parents died of cancers quite young.
Lisa: So I'm holding out till next month really when they
Lisa: become regulated, but I was thinking of getting one of
Lisa: the prepaid funeral plans. Just because I think actually the
Lisa: amount of money I paid into my mom's whole of
Lisa: life policy, I probably didn't get back as much as I paid
Lisa: in (inaudible) with to be honest. And sometimes think
Lisa: actually it'd be better to get one of the prepaid
Lisa: funeral plans once they're protected, just something to stop the
Lisa: kids having to sell the house to get rid of me.
Phil: That's it. There's a few different options for funeral planning. As
Phil: you say, one is a whole of life policy. That's
Phil: a life insurance plan that guarantees to pay out an amount on someone's
Phil: death. So that's one option, funeral plans is another. And even
Phil: with funeral plans, there's a few different ways you can
Phil: do funeral plans. Some providers you can pay a lump
Phil: sum and then that guarantees your funeral at that cost,
Phil: and other ones let you pay it up monthly as
Phil: well. So if someone died soon after, it's good value.
Phil: But if you were to live to quite a good age, then
Phil: you'll find that you've probably paid in, again, an awful
Phil: lot more than what the cost of it has been. Funeral
Phil: price inflation has been really high over the last few
Phil: years. The average cost of a funeral's gone up. It can
Phil: range from anything 3000, 4000, 5000 pounds if you were paying it
Phil: now as a lump sum. But I guess one of
Phil: the advantages of doing that is that you know regardless
Phil: of what the funeral price is and the future that's
Phil: how much you've paid for it. It's good to be
Phil: thinking about things like that. I mean death is not a nice
Phil: subject to think about or talk about, but it's good
Phil: to be planning and looking at all these sort of
Phil: things. One thing I noticed you had mentioned was about wills.
Lisa: I do need to do one.
Phil: Yeah. I would always recommend to people writing a will.
Phil: And if you do have a will, make sure it's
Phil: up to date. I've seen it before where people have
Phil: maybe got divorced or they've separated and that can cause
Phil: issues. And again, you want to have a look and you think what age do I want my children
Phil: to inherit any money at. There's so many considerations, and
Phil: making a will is so important. A lot of solicitors
Phil: will offer free wills, but I'm always a bit not
Phil: cynical, but you don't get nothing for nothing. And what
Phil: they do is they often put themselves down as the
Phil: executor. It's almost a license to print money at some
Phil: point in the future when they are sorting out the
Phil: estate. So I always say to people, if they can,
Phil: try and find your own executors. I know it's asking
Phil: somebody to sort things out when somebody passes, but saves
Phil: the estate a fair bit of money doing that as well.
Lisa: In about three years time I finish off paying this quite
Lisa: chunky loan. So that will give me a bit more
Lisa: disposable income. I'm thinking child one will probably be coming
Lisa: out of university at that point, while child two might
Lisa: be going in it. Would you recommend using that disposable
Lisa: income towards a pension or helping to reduce their student debt?
Phil: There's quite a number of different things that you can
Phil: do. You mentioned there about trying to help your son at university,
Phil: so that's one of the options. But it's really important to look
Phil: at your own financial future and make sure that's all taken
Phil: care of as well. So looking at your own needs
Phil: as opposed to your sons, you've got the needs of
Phil: retirement planning. So there's the option to look at paying
Phil: money into a pension. You might also want to consider trying to
Phil: repay the mortgage earlier. I think you were looking at
Phil: the mortgage term running out at age 70. Now you might think, "
Phil: I don't really want to work until age 70". So
Phil: trying to pay the mortgage off sooner may be a
Phil: good consideration as well. But it's so important to have
Phil: your retirement plans all in place and make sure that
Phil: they're well funded as well.
Lisa: That's probably given me quite a lot to work with to be absolutely
Lisa: honest. I've got share safe plans that I take out
Lisa: through work, but I'm only putting in about 10 pounds into each
Lisa: at the moment. And it's before you actually get paid,
Lisa: so you don't really notice it too much. But as
Lisa: for sort of putting any extra money away for saving
Lisa: at the moment, it seems that's probably not an option
Lisa: for me. That money really should be directed to paying
Lisa: off some of the debt on the credit cards, rather
Lisa: than putting some away for a rainy day over and
Lisa: above the share saves or the pension. Would you agree
Lisa: with that?
Phil: Even even small amounts. I mean if you think, " Yeah,
Phil: I can afford 10 pounds a month or 20 pounds
Phil: a month". Something is better than nothing. And you've got
Phil: the option where you can put money into ISAs, Individual
Phil: Savings Accounts. Any growth that you get in that you
Phil: don't pay any income tax or capital gains tax on
Phil: it. And one of the things I would say is
Phil: that financial planning and investing, it's not just for people
Phil: who have got a lot of wealth. Building up for
Phil: someone in your position, Lisa, even trying to save small
Phil: amounts, whether that's 10 pounds a month, 20 pounds a month, if you do
Phil: your budgets and feel that you can afford a certain
Phil: amount it's always good to try and build the savings
Phil: up. It gives you a lot more options in the future as well.
Lisa: So Phil, what would be your recommendations around budgeting? I
Lisa: mean obviously at the moment it seems like you've got
Lisa: very little left at the end of paying all the bills and it
Lisa: seems to need a hundred places to go. How would
Lisa: you start sort of seeing where you could cut back?
Phil: When I'm looking at budgeting with people, I see all
Phil: sorts of ways that they could improve their finances. It
Phil: might be that they've maybe got current account with a
Phil: bank and there may be better ones out there. You
Phil: get some current accounts that actually pay you for having
Phil: the account with that bank. Another option may be to
Phil: review the mortgage. I know you're in a fixed rate
Phil: at the moment, but when that fixed rate ends you've
Phil: got the option to look at remortgaging to try and
Phil: get a better deal. Sometimes for some people it's worth
Phil: consolidating their debts into the mortgage as well, that can
Phil: sometimes save quite a bit on the monthly outgoings. The
Phil: downside with that is that you're then taking the debt
Phil: over a longer period of time, so there can be disadvantages there.
Phil: Sometimes it can be that you maybe got a credit card
Phil: that's on a high interest rate. So we can look at redoing
Phil: that. Is there a naught percent balance transfer deals out
Phil: there? Are there subscriptions? I mean people will subscribe to
Phil: things like Amazon Music, they might have a Spotify subscription.
Phil: Quite a lot of the times, those things not always are they
Phil: used or needed. And sometimes people duplicate things. They've maybe
Phil: got broadband with one company if they put it in
Phil: with their phone deal they can sometimes save a bit
Phil: there. I've had a couple of people who's been paying
Phil: two home insurance policies. So we thought, look you only
Phil: need one. So there's an awful lot of ways that
Phil: you can review your finances to try and make improvements
Phil: to free up cash. I remember once as well seeing
Phil: somebody that had mobile phone insurance that they'd been paying
Phil: for about 10 years on a mobile phone that they didn't
Phil: even have anymore. They actually got all that money refunded
Phil: from the company, which was great. So it's really good
Phil: to go in detail of all the ins and outs
Phil: that you've got and just see exactly where so we can make sort of
Phil: savings and help you with your financial plan for the future.
Lisa: I think I definitely would look at my budget. I think I
Lisa: tend to just run out of money third week of the month and go, "Okay, here we go. We're living on pasta guys". But actually
Lisa: if we possibly shaved a bit off at the beginning
Lisa: of the month, maybe would be okay.
Phil: You've got a good handle on things. You've got a better handle than
Phil: a lot of people I come across. So that's a
Phil: really good thing. And I would say just now, especially
Phil: with the cost of living crisis, really important to kind of look
Phil: at all the ins and outs that you've got. If
Phil: you can make savings there and use some of that gains
Phil: for the long term future, you've got the basis to
Phil: really push on and do well for the future Lisa.
Angelica Bell: Lisa, there were some encouraging words from Phil weren't there?
Lisa: There was indeed. Yeah. Nice to know when you think you got things a bit
Lisa: right anyway.
Angelica Bell: And what were the main things you took away from
Angelica Bell: that conversation?
Lisa: I think it's definitely to have a look at getting that will in place as soon
Lisa: as possible. Definitely reexamine my budget and go with the
Lisa: prioritization plan really. Actually make that list of everything that needs
Lisa: some attention and prioritize it from there.
Angelica Bell: And then you can set them out and tick them
Angelica Bell: off when you've done them.
Lisa: Exactly. Yeah. Nice to do (inaudible) .
Angelica Bell: Well thank you so much for talking to us today
Angelica Bell: on Rewirement, and I want to wish you all the
Angelica Bell: very best in your journey towards making sure today and
Angelica Bell: tomorrow are both being looked after.
Lisa: That's lovely. Thank you.
Angelica Bell: Beverly and Lisa there telling us about their own individual
Angelica Bell: financial balancing acts, and I'm sure there are things that
Angelica Bell: we can all recognize in their stories. And to give
Angelica Bell: us some general pointers about managing that balance as successfully
Angelica Bell: as possible, I'm joined once again by Matt Frain who
Angelica Bell: is Advice Director at Legal & General Financial Advice. Now Matt,
Angelica Bell: thinking about tomorrow is all very well and good, but
Angelica Bell: we don't know what's around the corner. So we sometimes
Angelica Bell: have to live for today. How do we strike that balance?
Matt Frain: So whilst Lisa and Beverly are both approaching this from
Matt Frain: a retirement planning angle, the payoff between current day and
Matt Frain: future needs is very much one that we experience at
Matt Frain: every stage of our lives. I would strongly suggest, particularly
Matt Frain: in the current economic climate, to challenge yourself on what's
Matt Frain: really important and to prioritize accordingly. And when you do
Matt Frain: this, make sure that you strike that balance between today
Matt Frain: and tomorrow. And the reason that that's very difficult for
Matt Frain: people is a concept known as present day bias. Don't
Matt Frain: know if it's something you've ever come across.
Angelica Bell: No, no.
Matt Frain: No. So it's an interesting one, it's one that's used
Matt Frain: in behavior economics. It's where you overemphasize the importance of
Matt Frain: having things today rather than waiting for tomorrow. And as
Matt Frain: human beings, we are kind of hardwired to do that.
Angelica Bell: Is that about patients as well?
Matt Frain: It can be that, absolutely. And when you look at financial
Matt Frain: planning, that can become a real issue for people. It's
Matt Frain: very hard for them to see themselves in the future.
Matt Frain: It's particularly prevalent in pensions. You see a lot of
Matt Frain: that where people don't save early enough because they can't
Matt Frain: imagine being old and needing to draw a pension. There
Matt Frain: was a discussion earlier around potentially accessing pensions early. Now
Matt Frain: that could be a very sensible option, however it could
Matt Frain: also be a sign of present day bias in action.
Matt Frain: And as the financial advisor Phil rightly points out you
Matt Frain: need to consider the impact on doing something like that,
Matt Frain: on taking your pension early, on the retirement income that
Matt Frain: you'll then receive. Now how do we actually go about
Matt Frain: striking the balance? For me, one of the best ways
Matt Frain: is budgeting. There are lots and lots of free to
Matt Frain: use budgeting tools online. And when you do this, particularly
Matt Frain: if you're in the latter stages of working and looking
Matt Frain: towards retirement, don't just budget for today but also budget
Matt Frain: for what you're going to need in the future so
Matt Frain: that you can look at both sides of the argument
Matt Frain: and make sure that you're setting yourself up well for
Matt Frain: the future whilst also being able to enjoy today.
Angelica Bell: There's lots of things for me to think about there. But what
Angelica Bell: about knowing if you are on the right path for you?
Matt Frain: It's a very, very interesting one. It's one that comes up
Matt Frain: all the time in financial planning and retirement planning in
Matt Frain: particular. How much should I contribute towards my pension? How
Matt Frain: much will I get as a pension? How much will I
Matt Frain: need in retirement? The slightly unhelpful but ultimately correct answer
Matt Frain: to this is that it absolutely depends. We're all different, so it
Matt Frain: depends on what your plans are, what your ambitions are.
Matt Frain: It depends what age you want to retire, what kind
Matt Frain: of lifestyle you want to have in retirement. So it
Matt Frain: absolutely depends on your individual circumstances.
Angelica Bell: So it's always personal and it's about what's right for you.
Matt Frain: Absolutely. There isn't a one size fits all answer here.
Matt Frain: It is personalized, as you say. So first things first,
Matt Frain: think about the type of retirement you'd like to have
Matt Frain: and work out how much your monthly costs are likely
Matt Frain: to be in retirement. Then I would suggest using a
Matt Frain: pensions calculator to work out how much your pension is
Matt Frain: likely to be worth at your chosen retirement age. Now
Matt Frain: most insurance companies, most pension providers will have a free
Matt Frain: to use calculator, or you could use somewhere like MoneyHelper
Matt Frain: which will also have one of these tools. What's fantastic
Matt Frain: about these tools, Angelica, is that you can play around
Matt Frain: with them and come up with what if scenarios. So what if
Matt Frain: I retired a year earlier or a year later? What
Matt Frain: if I paid an extra a hundred pound a month
Matt Frain: into my pension? And you can see the impact that
Matt Frain: has in real time. So it's really useful as part
Matt Frain: of that planning exercise.
Angelica Bell: Now I know you wanted to touch on housing equity here.
Matt Frain: Yeah, so it's another avenue for people to explore. We
Matt Frain: heard from Beverly about purchasing her forever home as she
Matt Frain: called it. And some of her considerations around where she
Matt Frain: can move to and potential cost challenges. Something that we
Matt Frain: see people do in their latter years, particularly if they're
Matt Frain: struggling financially, if they don't have enough in their pensions
Matt Frain: or any other means of funding their retirement, it's to
Matt Frain: downsize. Now downsizing can be a really good option for some
Matt Frain: people, particularly if the house has become a bit too
Matt Frain: big for you, possibly a bit unmanageable. It can make
Matt Frain: absolute sense and it can free up funds that you
Matt Frain: can use for retirement, so there's a lot to be
Matt Frain: said for it. But for other people they will have
Matt Frain: potentially a strong emotional attachment to the property. Their children
Matt Frain: may have grown up there, their grandchildren may be used
Matt Frain: to playing there and going around to see grandma and
Matt Frain: granddad, and they don't necessarily want to move out of
Matt Frain: that home. However, there are alternatives. And one of the
Matt Frain: things that people can consider is later life lending. You
Matt Frain: can take out a lifetime mortgage, you can take out
Matt Frain: retirement interest only mortgage, and what these products do they
Matt Frain: allow you to release equity from your home that you
Matt Frain: can use to spend on something like your retirement income,
Matt Frain: but without the need to actually move out of the
Matt Frain: property that you might be very much emotionally invested in.
Angelica Bell: Which means you can help yourself financially, but also stay
Angelica Bell: where you want to stay.
Matt Frain: Absolutely. And that can be really important to people.
Angelica Bell: Thank you, Matt. And of course, a big thank you
Angelica Bell: to Beverly and Lisa for sharing their stories with us.
Angelica Bell: Wherever you are in life, you can find lots more
Angelica Bell: resources and information on Legal & General's website, just go to legalandgeneral.
Angelica Bell: com. And one of the things you'll find there is
Angelica Bell: more detail on the course they've developed with the Open
Angelica Bell: University for people who are approaching retirement age. It's called
Angelica Bell: Retirement Planning Made Easy and is designed to help you
Angelica Bell: with one part of the great financial balance of life.
Angelica Bell: You'll find links to the course and more in the
Angelica Bell: show notes. I'm Angelica Bell, do join me next time
Angelica Bell: on Rewirement when we'll be talking about something we're always
Angelica Bell: being told is a good thing, getting on the property
Angelica Bell: ladder. Well it's easier said than done, especially for younger
Angelica Bell: people. And we'll be talking to two keen first time
Angelica Bell: buyers and trying to help them get a foot on
Angelica Bell: that all important first rung. You can follow this podcast
Angelica Bell: on your favorite platform and I'll catch you then.