Over 50s finances — 3 ways to manage money wisely

In many ways, your 50s should be a golden era — you might be settled into a fulfilling career and enjoying a little more time to yourself if your kids have flown the nest.

But as you plan for retirement and consider your family’s financial security when you’re no longer around, it’s also a time for getting your house in order.

If you’re looking for some insights into over 50s finances, here are three ways to manage your money wisely.

  1. Navigating inheritance tax (IHT)

In the UK, the tax-free threshold of your estate is £325,000 — but the standard IHT rate on anything above that is 40 per cent.

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So if you want less of your estate to go to the taxman and more to your family or other beneficiaries, you’ll need to navigate the system.

If you leave more than 10 per cent of the net value to charity in your will, the estate can pay a lesser rate of 36 per cent on some assets.

Additionally, gifts between spouses are exempt from IHT and there are no charges applied if you donate £5000 to your child to help towards wedding expenses.

To find out more about the ins and outs of IHT and gifts, read through the UK Government guidance.

  1. Make a will for free

If you die without a will, the rules of intestacy will allocate your estate according to a stringent formula which might not align with your wishes.

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Yet, recent research from Macmillan Cancer Support revealed that 42 per cent of over 55s don’t have one.

Making a will isn’t morbid — it’s a practical way of ensuring that the people you love are cared for when you’re no longer here.

Hiring a solicitor to help is recommended as they’re regulated by the Solicitors Regulation Authority and the Legal Ombudsman can investigate should anything go awry.

And although lawyers are expensive, in March each year, practices who participate in Free Wills Month will draw up your will with no charge. They’ll politely request a courtesy charity donation in return, but there’s no obligation.

  1. Equity release or remortgage

Some people in their 50s and beyond lack significant cash savings but have equity value tied up in their homes.

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And equity release or remortgage can release some of this equity to use as you choose — whether you want to treat yourself to a home extension or help a child with the deposit for their first home.

If you’re over 55, an equity release plan can unlock cash as a lump sum, regular income or combination of both, while remortgaging can help you secure a lower interest rate on your mortgage or consolidate your debts.

Seek qualified financial advice before choosing either option, but useful calculators on marketing website Later Life Lending provide a rough estimate of the cash each might make available to you.

So there are three ways to manage money wisely if you’re over 50 — use them to start futureproofing your finances today.

How do you manage your money as you get older? Share your thoughts in the comments section.