Is it time for a mid-life savings shake-up?

Middle-aged couple chopping up mushrooms

As retirement edges closer, now might be the time to have a rethink — and a rejig — of your savings.

You’ve got savings, a pension, perhaps even stocks and shares. You’re on track… right? The truth is our financial health could do with a check-in every now and again, and making some small changes can pay dividends, especially in mid-life.

By Shilpa Ganatra

Rifle through a newspaper and it’s sure to be filled with reports about millennials or Gen Z, the young cohorts that earn the most attention. It’s a little too easy to overlook the older groups, who are supposed to have reaped the benefits of the post-war years and have their lives nicely sorted — even though that’s often not the case. 

Though those around 45 to 60 years might have begun their adult lives on the right foot, cut to thirty years later, and changes in the meantime — both in individual lives and society — means that they’re deserving of renewed attention, to make sure all is well.

There’s the question of how finances are looking, long after they first began working. This in turn leads to the field of career – all the more important as Brits work for longer, and some feel they're facing age discrimination too 1. This, plus the stresses and strains of everyday living, mean they also need to take some care over their mental and physical wellbeing.

The smooth running of these varied aspects is the focus of Aviva’s new ‘mid-life MOT’ app, designed specifically for this age group.

The 45-64 predicament

When it comes to the money bit, even with pensions, investments and savings, some pressures are rarely factored in at the start of adulthood, like being in the ‘sandwich generation’.

As Alistair McQueen, head of Savings and Investments explains, “this is the generation that's often looking after younger members of their families and friends, and also increasingly looking after older members of their family and older friends. So it's a group that's under a lot of strain.”

It doesn’t make things easier that this age group is also approaching retirement, “and for generations before them, retirement planning was pretty much done by their employer: you started work, your employer put in place a pretty generous pension, and then you retired at the age of 60 or 65. Now, they’re responsible for their own financial planning. It's great to be given that responsibility, but not when you don't feel you can carry it.”

Just to complicate matters further, a higher percentage in this age bracket are renting than before 2, which means more people will need to factor in accommodation costs when thinking about the future. 

Not enough variables to contend with? Rachel Picker, a financial adviser, has also seen her fair share of people whose mid-life turned out differently to how they imagined it. They might have had four children instead of the planned two, climbed the career ladder faster than expected, had health issues that stopped them working full-time, or discovered a love of the Caribbean that called for a bigger pension pot.

“At the start, they can’t see far into the future, and they’re more concerned with immediate pressures like how much they can afford to save. They might reassess their pension and savings as they change jobs, and their workplace pension contributions naturally increase as their salary increases, but often the change in circumstance over that period of time has a greater impact,” she says.

Women are often the hardest hit. “They might have had time out to have children or care for their parents, as women are still more likely to be the carers,” says Rachel.

“Many only understand their pension as part of a couple, but because we don’t know what’s around the corner, it’s important to understand it individually too.”

A mid-life MOT

Life’s changes mean that at around 50, it’s the right time to get under the hood of our finances and make sure everything’s in tip-top condition and tinker with it if needed. To help in the most painless way possible, Aviva's mid-life MOT app takes the concept of a car MOT and applies it to… well, life. 

Jargon-free, it features a 15-point checklist covering wealth, careers and wellbeing, with more detailed info and an action plan to ensure things are ticking over nicely.

“The first part of the app is like an MOT test, with 30 statements and you answer if you agree or disagree with them. This can be done in less than 10 minutes, and then you can walk away with some confidence that you know where you are,” says Alistair.

“Then you could work through the 15-point checklist. It takes around half a day to cover everything if you did it all at once, but you could do it in stages: around 90 minutes on wellbeing, 90 minutes on careers, and 90 minutes on wealth. We’re not saying it has all the answers and it doesn’t replace a one-to-one conversation, but that way you’ve done your check-up and you can get on with your life.”

Small tweaks with a big impact

The app is free to use, no personal data is collected and it’s infinitely better than walking into retirement blind — especially as even at 60, small tweaks can have a real impact on savings and investments.

This could involve easy fixes, like moving savings to an account with more interest, or more significant ones, like dusting off all your old workplace pensions in order to find out what you’re getting and when. “You might have one pension but it’s not unrealistic to have 10,” says Rachel. “The impact isn’t different. You’d still add them together and find out if there’s a shortfall because saving an extra £100 a month now could plug that hole.

“You can also add investments, property and downsizing into the mix to work out your income once you retire,” she adds. “Ultimately, you should take as much ownership of your pension as you do your bank account.”

Never too late for a check-up

As information is power, the app can also help with finding out what your state pension will be and when you’ll be able to cash in. “That’s important as it’s almost everyone’s biggest source of income in retirement,” says Alistair. 

It’s also useful to find out about retirement options. For example, people could access private pensions 10 years before the state pension kicks in, which helps for those who want or need to slow down ahead of retiring fully. The app contains a list of other websites and resources, to make it easy to find helpful advice. 

“It's never too late to do a check-up,” said Alistair. “The first step is getting an understanding of where you're starting from for your wealth, your work and your wellbeing. After that, it’s much easier to take control. And there's a real risk that if you don't take control of your finances at this stage in life, you may well reach the end of your job, open up your envelope and find it’s not what you expected inside.”

And if we don’t take risks when it comes to the smooth running of our cars, why take risks with the smooth running of our future?

Need a Mid-Life MOT?

Get your free Mid-Life MOT by downloading the free app from Google Play or App Store