Retirement planning in your ‘second 50’. How longer lives are changing how we view life after 50.

May 6, 2024

At Talis IFA, we’re very much of the ‘get rich slow’ persuasion. What do we mean by that? It means that, rather than encouraging our clients to jump on the latest ‘sure thing’, we’re advocates of starting to save and invest as early as possible, and reaping the rewards (thank you, compound interest) of regular, long-term beneficial financial habits.

That said, there comes a point in everyone’s life when retirement begins to feel like a reality, and we begin to wonder whether we’ve saved enough. For most of us, that feeling starts to build during our 50s.

Maybe your children are grown and on their way to financial self-sufficiency. Your income has been steadily increasing, you’re heading towards paying off your mortgage, and financial freedom feels well within your grasp.

Or perhaps you’ve gone down the path of divorce, a second family, starting again with a new home and a new mortgage, making things a bit more challenging.

The point is, that whilst everyone’s circumstances are different, reaching our 50s and beginning to focus more on what retirement might look like is a shared experience.

Living longer is affecting our attitudes to retirement

But with people living longer, and 100-year life spans becoming more common, planning for later life, or for your ‘Second 50’ as it’s sometimes called, is even more crucial.

According to recent research by Aegon, a leading provider of investment, protection and retirement solutions, there are over 25 million people in the UK who are living their Second 50. And we’re not just living longer lives, but are viewing later life very differently compared with previous generations.

The traditional three life stages – education, work and retirement – are blurring into multi-stage lives, where multi-track careers, and periods of learning and re-training are becoming more common. Many people are also looking at a longer transition from work to retirement.

• Only 27% of respondents expected to have a ‘hard stop’ retirement, where they give up working in one go.
• 45% of respondents say that ‘running out of money’ is in their top three concerns for later life.

Turning 50 today comes with very different expectations from those of our grandparents, or even our parents, and we don’t always have a clear blueprint for how to manage the next decade or two.

Whatever your current situation, there are steps you can take now to set goals and maximise your retirement income, and the advice of an experienced IFA could make all the difference.

Finding financial stability

Before you begin to think about building financial independence for the future, it’s wise to ensure you have a safety net to protect you against the unexpected now.

A good first step is to build an emergency fund to cover three to six months of living expenses.

There’s a balance to be found between building up cash reserves and investing. How much you need to allocate to your emergency fund depends entirely on your own circumstances.

Boosting your retirement savings

Your 50s are often the period of your life when your earnings are reaching their peak, so it’s an ideal time to start channelling any extra income into pension contributions – which should bring the added benefit of tax relief.

Working out how much you will actually need to have in your pension pot(s) to ensure a comfortable retirement may seem daunting, so it’s a good idea to speak to your IFA about retirement planning. Retirement cash flow modelling might be helpful, too.

Over the next couple of months we’ll be looking deeper into Aegon’s research, considering the implications of living a multi-stage life – and looking at different approaches to planning for retirement and making the most of your Second 50.

If you’d like the help of a Talis IFA, who will look at your specific circumstances, help you to set clear objectives for your financial path from here, and guide you towards making decisions with confidence, find an IFA here.

 

A pension is a long-term investment not normally accessible until age 55 (57 from April 2028 unless the plan has a protected pension age).

The value of your investments (and any income from them) can go down as well as up, which would have an impact on the level of pension benefits available.

Your pension income could also be affected by interest rates at the time you take your benefits.

Your own personal circumstances, including where you live in the UK, will have an impact on the tax you pay. Laws and tax rules may change in the future.