Money and credit tips for your 50s, retirement and beyond

By Marianne Curphey

When you start nearing your 50s and beyond, the financial decisions you make could have a significant impact on your standard of living in retirement.

When you reach 50, you could have as many as 17 years left at work, but you might have as few as five. In any case, it's time to really get your financial life in order.

You likely have credit cards, a mortgage, and possibly a line of credit. Your credit mix is likely good. Now, you just have to maintain it by paying your bills on time and not carrying credit card debt (or as little as possible). money-tips-50s-beyond

As you edge toward your 50s (or if you're already there), here are four things you can do to make retirement -- and beyond -- a smoother ride:

1. Assess your liabilities.
Do you still have debts to pay off or a mortgage? Start taking steps to reduce your financial liabilities, says Lisa Conway-Hughes, a financial adviser who writes for the money advice site Miss Lolly.

She says many people still have interest-only mortgages, in which monthly payments cover only the interest and not the capital. Review your mortgage, and determine how you are going to be able to pay off the home loan at the end of the mortgage term.

"Make a list of your debts, and look at ways to start paying them off," she says. You want to avoid going into retirement with a lot of liabilities outstanding.

The same goes for credit card debt. If you have it, consider whether you can be more aggressive in paying it down. You don't want to enter retirement with that added expense.

If you're struggling to repay your debts now, get help. Use a free counselling service from a debt management charity such as StepChange, National Debtline, or the Citizens Advice Bureau. Their financial specialists will help you organise your debts to pay back the money you owe in smaller, more manageable amounts.

2. Take care of your credit rating.
If your credit is already good, you don't want to compromise it. If your credit is tarnished, you could face increased costs -- such as higher interest rates on your cards or any loans -- just as your income is plateauing or even fixed.

For example, you might want to switch mobile phone or broadband providers. The most competitive deals on credit cards, broadband and other services are offered to people with a clean credit history and good credit score.

Case in point: a 2014 survey by Cranfield Business School found that households with poor credit could end up paying £1,170 more per year than those with good credit.

3. Get more aggressive with saving.
You may be at the peak of your earning power, so think about making extra contributions to your pension.

"If you have earning potential -- put money away," says Michael MacMahon, author of the financial advice book, Back to the Black. "Don't forget that paying down debt remains the best risk-free, tax-free investment you can make."

Small amounts paid into a savings account on a monthly basis will soon add up. Make sure that you have set aside some money for your own retirement before you think about setting aside money for your children or other relatives.

Another tax-free savings vehicle that can help is an Individual Savings Account (ISA), which enables you to save or invest up to £15,240 in this current financial year (2016-2017). The money within an ISA grows free of income tax and capital gains tax.

4. Develop good habits (it's not too late).
Some good financial habits for any time of your life: Don't apply for too many credit products at once, keep your name on the electoral roll, and check your credit report at least once a year. Keep an eye on all your statements, too, to watch for signs of fraud -- you don't want a fraudster messing up your good score.

Unfortunately, some people "have not necessarily resolved their bad money habits by the time they are 50," says Simonne Gnessen, financial planner and director of Wise Monkey Financial Coaching. "Some people have never saved at all -- and reach their 50s with debt as part of their normal life.

"They use their bank overdraft as though it was their money -- rather than money they were borrowing -- and rely on balance transfer credit cards to clear that overdraft when they are near to their limit."

Other bad habits might include juggling overdrafts and credit cards, meeting only the minimum payment on their credit card each month, and using credit cards for essential spending, such as the weekly food bill.

She cites one client in his 50s who has £60,000 worth of credit card debt.

"Among my clients, the message I most frequently hear around money is that people never seem to spend less than they earn," Gnessen says.

 "For many people, hitting 50 makes them wake up financially," Gnessen says. "The reality of retirement dawns, and it can be a catalyst for people to take more control of their money."

See related: Helping an older relative deal with debt, Tactfully talking to your parents about money, Child-rearing costs are putting parents over 60 in debt

Published: 15 September 2016