Monday, August 24, 2009

5 Things to help Women boost their financial position in Retirement and other information regarding pensions, mortgages etc at any age"

According to The Times, Money Central, here are five things women can do to boost their financial position in retirement, although I would have put "Secure a Fair Divorce" and "never give up your rights to half of your ex husbands pension, if he has one", at the top of the list!

1) Ensure entitlement to the full state pension

From April 6, 2010 both men and women will need to have 30 qualifying years to claim the full basic state pension. It makes sense to get as near as possible to the minimum figure, so as to be entitled to a full basic state pension, currently £95.25 per week for a single person.

2) Pay into a private pension

Even if you have no income a husband or civil partner can pay up to £2,880 into a pension for you each year. With basic rate tax relief, the contribution is worth £3,600.

3) Make the most of Individual Savings Accounts (Isas).

Contribute as much as you can to stocks and shares Isas. If you invested your full annual Isa allowance, soon to be boosted to £10,200, for the next 25 years, this would build up to a nest-egg of £511,157, assuming real growth of 5 per cent. You can cash Isas in at any time and also take an income from them. Your savings build up in a tax-privileged environment.

4) Secure a fair divorce

Ensure that any husband's pension is properly valued when splitting assets and consider splitting a pension rather than giving up all rights to it in exchange for the matrimonial home.

5) Make the most of tax breaks

Women who are higher-rate taxpayers should make the most of the higher rate tax relief that applies to pension contributions. This means that every £1,000 put into your pension costs you only £600.

Recessionista advice in addition to this: be careful if you have a private pension. I can only quote from experience of a relative of mine, who lives in a Council Property, is in receipt of a State Pension and a small NHS pension. When disabilty meant that the person concerned could no longer bath, they went through a lengthy process of trying to get the Council to put in, a walk in shower. Eventually the work was done, a couple of years back now, but they had to pay £1,000 of their own money towards it. It seems the more money you have, the less you are entitled to from the State, a real catch twenty two situation, as they still have to pay towards their Council Rent and still pay Council Tax, although they do get a reduction. So unless you have a big pension and real financial security set up for old age, I wouldn't bother trying to do anything on a small scale, as you will dip out when you reach retirement age. I also know another elderly person who at 76 years of age, still pays her own mortgage, because once, many years ago (37 in fact) she split up with her husband who had once remortgaged the property and Income Support does not pay anything towards a re-mortgage, they only pay interest on the original amount borrowed to purchase the property, so if you borrowed 20,000, 10 years ago to get a new kitchen and a conservatory for example, they would never pay the interest on that amount. Also, don't be fooled into thinking if you don't fit the above criteria, you won't get a full state pension, all that will happen is your money will get topped up with Income Support so that you will still get the same amount to live on.

1 comment:

  1. Great post Recessionista. I'm often in a quandry about what plans to make. It seems to me that often the people who try to put something back for themselves end up struggling a bit while those that don't bother get all kinds of help.