2070 LAUNCH YOUR LIFE

Whole-life financial planning is about making sure that you have some idea or plan about the 'big things' to do with your money. Some of these might be:

• education or training programmes
• owning your own home
• a pension plan, so that you can have a fun and fulfilled retirement
• life assurance, so that those who depend on you financially won't need to worry about paying the bills should anything happen to you.

This all sounds very serious, but it's more about you taking control of your life and your plan.

Have a look at the following information and then create your Diamond 9.

Over 50s 'needing to work longer'

Almost two thirds of people aged over 50 fear they may have to work longer than planned because their savings and pensions have been hit by the recession, a study claims.

The report of the study, by the charity Help the Aged and Age Concern, found that 60% of 943 respondents said they might need to delay their retirement. Savers have seen their returns fall in recent months as interest rates have been cut to help lift the economy. Meanwhile, pension funds have been knocked by stock market declines.

As a result, the study also found that 47% of respondents were more concerned about their pensions and savings than at the start of 2009.

Source: adapted from BBC News

 

How bad is the UK's pension crisis?

In a nutshell, there is not enough money in people's pension funds to guarantee they have a comfortable retirement. And it looks as though the total loss may be even larger than previously thought. The effect is that many workers who have been putting money aside for their old age may find that their retirement income is much lower than they had hoped.

Why do we have a crisis?

One reason why this is happening is because medical advances over the last few decades have meant people are living longer. This means that more people need a pension and for longer. Government figures show that average life expectancy in the UK rose by five years for men and four years for women between 1980 and 2000.

Source: adapted from BBC News

 

Can I insure my life?

The concept of life assurance might sound a bit odd. It is basically a policy that pays out a sum of money when you die. Nobody wants to think about their death, but the reality is that our loved ones will probably need financial support after we have passed on.

The reasons to take out life assurance include:

• Mortgage repayments - people might want to arrange for any mortgage on their house to be paid off
• Replacing someone's salary - life assurance could help ensure that a family does not fall on hard times after the main 'breadwinner' dies
• Replacing childcare - life assurance could help to pay for childcare that might be needed if one person dies and the other needs to work but there are young children to look after
• Education expenses - cover for school/university fees after the death of the primary earner

Remember: getting the best quote is an important part of finding the right policy.

Source: adapted from www.moneysupermarket.com

 

Don't pay for pointless insurance cover

Everyone is trying to cut costs. More than a fifth of us have scaled back the level of our car and home insurance in 2008. So now is a good time to consider what insurance you need and whether you have any policies that can be scrapped.

Must-have insurance

The law requires that you have car insurance if you have a car. If you have a mortgage, your mortgage provider will insist you have buildings insurance. While these are obligatory, you can still shop around for the best deals.

Nice-to-have insurance

Some people choose to take out health insurance, which means that if they fall ill, they can usually be treated more quickly and in more comfortable hospitals than NHS services. However, health insurance is very expensive and won't cover you for all types of illnesses.

Unfortunately, burglaries, fires and floods can happen, so don't scrimp on your home contents insurance. You can keep the cost to a minimum by shopping around and regularly reviewing the personal items you actually want to be insured. For example, it's not worth insuring things that you'd struggle to replace (like one-off family heirlooms).

Travel insurance can also come in handy. If you're abroad and you fall ill, you probably won't want to worry about how to pay overseas medical bills. If you travel regularly, you can take out an annual policy, which will be cheaper than covering multiple trips separately.

Many people choose to take out pet insurance, and for good reason: while we humans can decide not to opt for health insurance and use the NHS instead, you won't get far taking a sick dog to the GP. And with vets' fees soaring, a sick pet can be a huge drain on your finances.

Life assurance guarantees a specific sum of money to a designated recipient (e.g. children or a partner) when you die (or the money goes to you if you live beyond a certain age). This is important if you have a family that would struggle financially when you die.

Source: Adapted from article in Moneyweek, 12 May 2009

 

Recap:

• It's important to consider long-term financial planning, to make sure you know how you will spend your money.
• It's more important than ever to think about pensions, as people are living longer and so spending more time retired without a regular wage.
• When a person takes out life assurance, they help to ensure that their loved ones are financially supported when they die.
• You'll need to consider what you need to get insured, and you should shop around for good deals on insurance.