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If you’re in your fifties, approaching retirement and worried you don’t have enough money stashed away, then you’re not alone.
According to the latest research from insurance and investment firm Aviva, the plight of cash-strapped pre-retirees has reached epidemic proportions.
It says 40% of 55 to 64-year-olds are saving nothing and that 20% of this age group still have more than £75,000 outstanding on their mortgages.
The research also shows that this age group’s finances are in a far worse state than those who are already in retirement, each having an average of just £8,593 in savings, whilst also being burdened with an average mortgage twice this amount at £16,694.
As if this wasn’t bad enough, 55 to 64-year-olds are less likely than those who have already retired to own their own homes, meaning they’ll either face having to pay rent or a mortgage when they do retire.
Don't bury your head in the sand
These are horrifying figures. But knowing others are in the same boat as you shouldn’t be any consolation. And burying your head in the sand won’t help either.
Next year there will be more than 18 million over 55s in the UK and a large chunk of these will be facing the financial disaster mentioned above.
So what can you do about it?
If you’re in this category, you might be tempted to throw your hands up in despair. But you can take heart that some banks are doing their best to help by offering some outstanding deals for the over-50s.
Current and savings accounts:
As far as an everyday current account goes, the Alliance & Leicester Premier 50 Current Account is a market leader. This account, available only to the over-50s, offers 6% interest fixed for one year on balances up to £2,500. That’s an unbeatable rate that trumps even the best savings accounts. Sure this rate only lasts for one year – after which it reverts to 1% - and sums over £2,500 will only deliver 0.1% interest. But keeping more than £2,500 in a current account is a waste of money anyway.
If you have more than £2,500 in savings, then you should be looking at putting it in a savings account. Just as the A&L offers a great rate on current accounts, the over-50s also have good offers available for their savings.
The Stroud & Swindon Building Society’s 50 Plus Notice Account is the current champion, offering the over-50s a very reasonable 3.2% AER with a 90-day notice period for withdrawals. The minimum deposit to open this account is £1,000.
If, on the other hand, you are able to lock away your savings for a few years, there are much better deals on offer. The best of these has to include Saga’s market leading five year fixed rate bond for the over 50s, delivering a superb 5.1% annually.
Unlike many other bonds, it allows you to take out your money early if you need to. Naturally there is a penalty for doing so – the equivalent of between 90 days’ and one year’s loss of interest on the amount withdrawn. So taking your money out early should only be done in an emergency.
ISAs
If you’re over 50, hopefully you’ve taken advantage of putting as much as you can in a cash ISA. The maximum you can put away each financial year is £5,100. So if you use your allowance for this financial year (before April 6) you could save £10,200 in cash ISAs this calendar year.
The problem so far is that rates on cash ISAs haven’t been very attractive. But Saga comes to the rescue again for the over-50s with a 3.9% rate fixed for three years.
Other savings for the over-50s
Special offers for the over 50s aren’t limited to bank and building society accounts. Use your maturity to secure yourself discounts on lower home and car insurance premiums. Insurance companies offer these discounts not because they feel charitable but because the over-50s tend to take fewer risks. They know you’re more likely to be spending time at home rather than at work, which makes life for burglars a lot more difficult. And statistics show you’re far less likely to claim on your car insurance than a teenage boy-racer.
These discounts might not make you rich in your old age but they’re still not an opportunity to be missed.
