The financial world is increasingly complex and as we age we will come across new situations that we may not be ready for, including: changes to how we access our money; where it’s held and how we can use it; changing technology; emerging financial concepts and yet to be identified risks, etc. What can make it more difficult as we age is: our attention to detail may slip, it often takes us longer to work things out and it’s sometimes harder for us to understand new concepts and their implications. Of course, if you’re familiar and confident with managing your own finances and the environment in which you do so is relatively stable, then it’s likely that you will want to continue doing this.
Each person’s financial situation and the management of their affairs is unique. Some will remain in paid work after retirement age, some will want to pass on an inheritance, some will want to and can afford specialised financial advice and others won’t. What is clear however is that most want to spend their later years as financially secure as possible.
There are a few instances where getting some specialised financial advice is advised.
Day to day living expenses – Many older people struggle to meet rising housing or living costs or have other obligations that make it hard to manage. If you are in contact with a budget advice service more discretion may be given if you get into financial trouble. Age Concern can advise you.
Managing debt – Increasing numbers of older people are entering retirement with debt, often after helping other family members, as a result of unforeseen expenses/events or living beyond their means, etc. Debt can quickly escalate so get financial advice. For homeowners, downsizing may be an option however the benefits are often not as great as expected and the type of available housing stock may not meet your requirements.
Helping family – Be careful with any financial gift. You may need the money yourself. Being guarantor for family members is very risky. While a gift seems safer, in the event of a relationship breakdown your family member could lose half. You may not intend that. A loan may offer more safeguards as written terms can ‘spell out’ repayment expectations. Get financial advice.
Investments and asset management – You may wish to rationalise or review these especially if your circumstances have changed.
Equity Release – Equity Release (previously also known as Reverse Mortgages) may free up capital. This can help older people take advantage of the assets they have accumulate over their lifetime to help them live the type of lives they want to in older age. An equity release may also suit those who are wanting to look into access private home support. Get independent legal and financial advice as once you have made this choice you reduce all other options. All reputable Home Equity Release lenders will give you a ‘No Negative Equity Guarantee’ so that at no time will you be required to leave your house, or your estate forced to surrender any other money to the lender.
Guaranteed retirement income schemes – These new variable annuity (fixed annual payment) offerings are a combination of investment and insurance.
In general – Simplify your financial affairs as much as possible, make a financial plan for the future (The New Zealand Society of Actuaries have devised Decumulation ‘Rules of Thumb’ which is useful for those not getting specialist advice. See: www.actuaries.org.nz – your library may be able to print this for you for a small cost), centralise information about financial matters, plan for the unexpected, develop a plan for transferring responsibility if/when required (involving trusted advisors/EPA, partner/spouse/children) and make sure any partner/spouse/children or others who need to know, understand your financial situation. Please note: The above is not personal financial advice.