When money becomes a problem, it may seem easier not to talk about it. But silence isn’t always golden. Taking control of your finances will help you take control of your life, too.
Talking about finances is difficult. In fact, it can be downright uncomfortable – requiring us to face up to present situations and future circumstances that to be honest, we’d rather pretend weren’t there. A recent report revealed that among over 55s, an estimated 28 per cent have not had a conversation with their spouse or family about their retirement finances. But not facing up to money matters can have a negative effect on both our physical and mental wellbeing, because fretting about finance is not good for our health.
Two-fifths of current retirees say they did not prepare adequately financially, and only a third realised this before retirement, while more than two-fifths do not think they will ever make up the shortfall. It’s no wonder that money worries top Britain’s stress list, with a whopping 40 per cent of us stating it is their biggest cause for concern.
LIFE HAPPENS…AND FOR LONGER
We are an ageing population, with people aged over 85 now representing the fastest growing segment of our society. Along with increasing longevity has come technological changes, greater individual responsibility and economic uncertainty. There are more threats than ever to our ability as individuals to weather financial challenges as we age: health and care costs, long-term unemployment alongside a rising state-pension age. Not to mention helping grandchildren, unforeseen repair bills, a sustained period of low interest rates and rising inflation.
If life was simple and predictable, there would be less need to be financially resilient, but life is rarely certain and we all have to make increasingly complex financial decisions. The unfortunate outcome is that all too often, longer-term goals like saving, are sacrificed at the expense of immediate need. Uncertainties in life, like the economy, personal health, and family circumstances, mean that planning ahead becomes well-nigh impossible – particularly if you have limited resources.
Even the best budgeters can face problems as returns on savings or pension investments fall, and day-to-day living costs increase. Living on a fixed income makes it more difficult to respond to the unforeseen. In fact, research published by ILC-UK and Age UK found that 3 in 10 older people are struggling to repay their outstanding debts. The research also found that older people who experienced problem debts were more likely to have a significantly reduced quality of life. Yet, 66 per cent of the population had not sought professional financial advice on retail investments, pensions or retirement.
ADVICE IS PRICELESS
If there is one thing to take away from this article, it is the importance of advice. Good quality information, advice and guidance are essential to enabling you to make informed decisions, plan ahead, manage outstanding debt and access entitlements and services. Whether you are facing an urgent debt issue or worried about providing for your future potential care costs, speaking with an adviser will open up a whole world of professional ideas and approaches you may not have been aware of or thought about. If a specific issue has been weighing on your mind, having someone work with you to overcome the problem is a huge relief. Start by speaking with an Age UK adviser, like our debt specialist Nigel Taylor (see p.6). You’ll be so pleased you did.
THE RIGHT RETIREMENT
At Age UK Islington, we believe the word “retirement” should be synonymous with another: “freedom”. The freedom, after decades of work, to get up when you want, to choose how you will spend your day and to travel the world if you wish. But while a few are lucky enough to enjoy such a lifestyle when they retire, many will struggle to make ends meet. That is the reality of living in Islington, the London borough with the greatest disparity between its richest and poorest residents.
A reality that means we are always on the look out for ways to help people do more with less – to stretch their cash and maximise budgets. Overleaf we introduce a number of practical and easy to implement money-saving ideas to help you realise the freedom you deserve.
1. CUT THE COST OF YOUR FUEL BILLS
After years of cut or frozen prices, the big energy suppliers like EDF, npower, SSE, E.on and Scottish Power are starting to hike their prices.
Rather than wait for the Government to cap prices on energy tariffs, take matters into your own hands and you could save up to £616 on your gas and electricity bills by simply switching energy supplier.
Too many of us are sitting on a standard variable tariff, adding an average £262 to annual fuel bills, according to recent figures from First Utility. Moving away from the larger suppliers to a smaller provider is not only substantially cheaper, you’ll end up receiving more attentive customer service as well.
Start by visiting www.energyhelpline.com and enter your postcode in the box on the homepage. Answer a few simple questions and they will show you how much you can save by changing supplier. You can even enter your phone number, so someone can call you to help you navigate the simple switching process.
2. PAY-AS-YOU-GO MOBILE PHONE
Moving from a pay monthly plan to pay-as-you-go can save you £100s. Break free of the tariffs, the hidden charges and the handset fee. You can buy phones very inexpensively, especially if you are willing to compromise on some bells and whistles. Then it is merely a case of setting a budget each month for pay-as-you-go vouchers. People in practice found they use their phone much less going this route and save even more in the long run.
3. FIT A WATER METER
According to Ofwat 46% of customers in England and Wales now have a water meter and paid, on average, £100 less for water and sewage services than customers without a meter last year. The great news is your water company will provide and install a meter completely free of charge.
You’ll be surprised how water conscious you become – taking shorter showers or turning off the tap while brushing your teeth for example.
Once you have a meter fitted, you have 13 months to decide whether you wish to remain on the metered tariff or revert back to an unmetered tariff. You should expect to receive at least two bills, which will allow you to compare your charges before and after the meter was installed.
4. MAKE A SHOPPING LIST
In a nutshell, write down exactly what you need and stick to it. Did you know that people spend on average £20 more at the supermarket if they don’t make a list? Such is the power of the sneaky purchase. The call of the confectionery aisle. We’ve all p-p-p-picked up a packet of Penguins when we shouldn’t. In addition, don’t go shopping when you’re hungry. It’s been proven that you will crave and stock up on unnecessary goodies if you’re peckish.
5. GET THEE TO A LIBRARY
Why buy, when books, CDs and DVDs are at your disposal for free? Also, be sure to take advantage of their public computers, wifi and internet access.
6. CAR AND HOME INSURANCE
Age is often a factor in certain types of insurance. For example, with car and home insurance, the older you are, the less likely you are to claim, which makes premiums lower. The key is to shop around and don’t always think that because an insurance product is sold especially to older people it is going to be cheaper. All insurance policies take into account your age, so you may be surprised that the best deals are not found in the providers offering to ages 55+.
Also, put a note in your diary to look at comparing prices again when it is time to renew your insurance next year. There are always cheaper options to be found every year, so you can keep saving. To ensure you secure the best deal, use three comparison sites, namely www.gocompare.com, www.confused.com and www.moneysupermarket.com. They don’t all share the same pricing information, so it pays to search across all three websites.
7. GET WHAT YOU’RE ENTITLED TO
Approximately £3.5 billion in benefits go unclaimed by pensioners every year. Please call Age UK Islington today on 020 7281 6018 to arrange a free evaluation of what you’re entitled to. From winter fuel payments to pension credits, it pays to know exactly where you stand. Did you know for example, that an estimated 200,000 people are missing out on carer’s credit, which is a special protection to ensure you gain enough National Insurance contributions for the state pension.
8. PACK IT IN
On average, every cigarette now costs 40p. For someone smoking 20 a day, stopping works to a cough-saving £3,000 a year. If you cut back on the booze as well, you can save even more and enjoy a significantly healthier lifestyle into the bargain. www.nhs.uk/smokefree
9. BARGAIN HUNT
There is always a sale on somewhere, so make sure you are always thinking about forthcoming birthday and Christmas pressies. Not only will you save £100s, but you’ll enjoy stress-free pre-Christmases and no last-minute birthday worries.
10. GET TOGETHERS
Get Togethers are a fantastic way to meet new people, explore pastimes, take day trips, connect with the arts, keep fit, play sports, dance your socks off and much, much more. Most are free, but some require a minimal contribution to cover the cost of the refreshments. Even so, they are still the most cost-effective entertainment you’ll find in the capital.
Using your freedom pass, you can literally join any Get Together event every weekday, plus a Saturday Social, and be hard pushed to spend a fiver. It’s the equivalent of having a gym, theatre, museum and cinema membership without any of the associated fees. Brilliant.
If you are worried about debt or any other issue relating to finance, please call 020 7281 6018 to arrange a friendly, informal chat with one of our advisers.