Life begins at 40

The children have grown up: one wants a new car, the other needs help at university, and you're wondering whether you've put enough into your pension plan. Justin Urquhart-Stewart presents a guide to mid-life financial planning

In our forties, and with a maturing family, we move into a new stage of life. The mortgage is replaced by either our son's motorcycle or daughter's boyfriend as our biggest worry. Our career path is not quite as clear as before and there is that nagging feeling that retirement is not quite as far away as we had hoped.

So it is time for a mid-life financial service check. This is now a key moment for some considered thought and reflection about your family's financial position. So sit down and prepare to change your oil and polish your plugs.

I have previously mentioned the benefit of constructing a family balance sheet of your assets and liabilities. Now is the time to do this again. If things have not gone quite as you had intended, then the good news is that there is still time to do something about it.

Firstly review the assets, which should include your home and its contents as well as some savings. Hopefully there is a pension scheme (either a personal or a company one) running.

Check up on all the values of these items, not forgetting any insurance policies you may have. Against this, list your liabilities. These will include the mortgage and any other loans and overdrafts.

Add both columns up and, with a bit of luck, this will show a positive net worth. Don't worry if it is not as large as you had hoped. Raising a family is not cheap.

But now is the time for some clear direction. This is the stage for you to concentrate on building up your net worth while covering the other expenses heading your way.

The chances are that your children will remain a liability for some time yet. As my mother used to say whenever we spoke about leaving home: "The only thing you leave at home is a mess".

This, it would appear, is an increasingly common position for parents when attempting that final push to give flight to their offspring. We are finding it increasingly difficult to ensure that our children are able to exist without further parental support.

University and college may be vital but, in these days of limited grants, they are expensive: over pounds 3,000 per annum. Inevitably, this is leading many offspring to consider staying under the parental wing while studying.

Although there are student loans, few of us wish to see our children in debt as they embark on their careers.

Your parents also need planning for as well as children. It may not be the most palatable subject to discuss, but by now they will have retired and it is sensible to discuss the provision for their care.

Whether it is living with you or in sheltered housing, start considering the alternatives soon.

Additionally the preparation of powers of attorney to cover for mental incapacity is essential for all of those concerned if something does occur.

Good housekeeping here also includes a gentle reminder about wills and appointment of executors being kept up to date. None of these are expensive, but they can have expensive consequences if not addressed.

Apart from the hatchlings making a noisy and prolonged departure, it is to be hoped that your expenses are declining and your disposable income is improving. But before quiet holidays for two are planned, I must counsel severe caution.

Now is the time for you to be increasing payments into investments for retirement. If your pension has grown check it anyway to establish an estimated annual income from it.

Can you live on that now? Or more to the point, could you live on it in 15 to 20 years' time, taking into account inflation? Seek some professional guidance. Actuaries may not be very amusing but they are very useful.

But don't over-commit yourself. It is difficult if not impossible to extract money back from a pension scheme and expensive to scale back commitments once they have been made. You may need to access the cash (for university fees?). If there is too much uncertainty, consider personal equity plans as an alternative. These are tax-free and will allow you greater flexibility.

Most of our savings and investment pots are likely to be still quite modest. Try and identify how you can increase monthly contributions to savings schemes. In a few years' time you will appreciate anything you can put away now.

Check to see if you have any old endowment policies due to mature. Yes, they may only have been pounds 25 per month but hopefully they have amassed a reasonable value. Check also if you have any company save- as-you-earn schemes maturing. If not, now is a good time to start one if your employer has such a scheme.

If you are fortunate enough to have these maturing then seek advice. But take care. Financial advisers sniff out lump sums they can earn commission on better than aardvarks do ants.

Go for quality advice and shop around. I don't believe in free advice - they are only getting their money from you elsewhere.

They and you must look at the whole picture to include the mortgage and see whether it is better to pay that off first. Each circumstance will be different.

There is an additional issue here. These days earlier retirement dates are becoming more common. It would be wise to include this in your planning, particularly if the chances of further employment become more difficult.

I add to this critical illness cover. First check with your employer for any cover. If this is low or you are self-employed then shop around. It is very useful but can be expensive. Don't worry if you can't replace all your income. You can certainly ease the situation. So hope for the best but plan for the worst.

I know none of us wish to talk about it, but we must address our own mortality. As part of the mid-life service check take stock of your family's wills. What are you going to leave to whom, and how?

A review will throw up any questions on inheritance tax, executors to help after you have gone and whether you need to establish any simple trust for other family areas, such as children by a former marriage.

So I hope this gives an outline of your mid-life service. Subject to some failing bodywork and maybe a bit of dodgy undersealing in years to come, your financial arrangements should be in good order for some years.

But, as they say, check it regularly. Your financial oil and water levels always need watching.

The author is business development director at Barclays Stockbrokers.

BEFORE YOU MAKE A MID-LIFE DECISION

Do

Sit down and draw up a balance sheet of your financial assets and liabilities.

Be prepared for some continuing expenses, especially if your children go to college.

Draw up a plan to increase your future savings, investment and pensions provisions.

Ensure you and your spouse have up-to-date wills.

Don't

Forget to persuade your parents to make their own financial plans to cope with possible nursing care in their old age as well as inheritance tax planning.

Tie up too much money in a pension scheme. You might need some free capital for emergencies. Consider a personal equity plan as a compromise.

Forget critical illness or health-care planning.

Life and Style
“What is it like being a girl?” was the question on the lips of one inquisitive Reddit user this week
News
peopleDave Legeno, the actor who played werewolf Fenrir Greyback in the Harry Potter films, has died
Arts and Entertainment
Armando Iannucci, the creator of 'The Thick of It' says he has
tvArmando Iannucci to concentrate on US show Veep
Life and Style
beauty
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Sport
Luis Suarez looks towards the crowd during the 2-1 victory over England
transfers
Life and Style
Swimsuit, £245, by Agent Provocateur
fashion

Diving in at the deep end is no excuse for shirking the style stakes

Sport
German supporters (left) and Argentina fans
world cup 2014Final gives England fans a choice between to old enemies
Arts and Entertainment
A still from the worldwide Dawn of the Planet of the Apes trailer debut
film
News
peopleMario Balotelli poses with 'shotgun' in controversial Instagram pic
News
A mugshot of Ian Watkins released by South Wales Police following his guilty pleas
peopleBandmates open up about abuse
Sport
Basketball superstar LeBron James gets into his stride for the Cleveland Cavaliers
sportNBA superstar announces decision to return to Cleveland Cavaliers
Sport
Javier Mascherano of Argentina tackles Arjen Robben of the Netherlands as he attempts a shot
world cup 2014
Arts and Entertainment
The successful ITV drama Broadchurch starring David Tenant and Olivia Coleman came to an end tonight
tv
Sport
Four ski officials in Slovenia have been suspended following allegations of results rigging
sportFour Slovenian officials suspended after allegations they helped violinist get slalom place
News
14 March 2011: George Clooney testifies before the Senate Foreign Relations Committee during a hearing titled 'Sudan and South Sudan: Independence and Insecurity.' Clooney is co-founder of the Satellite Sentinel Project which uses private satellites to collect evidence of crimes against civilian populations in Sudan
people
Arts and Entertainment
Balaban is indirectly responsible for the existence of Downton Abbey, having first discovered Julian Fellowes' talents as a screenwriter
tvCast members told to lose weight after snacking on set
Life and Style
More than half of young adults have engaged in 'unwanted but consensual sexting with a committed partner,' according to research
tech
Life and Style
A binge is classed as four or more alcoholic drinks for women and five or more for men, consumed over a roughly two-hour period
tech
Finacial products from our partners
Property search

Consumers given power to choose a green deal

How would you like to be able to choose how your electricity is made and even where it come from? It may sound futuristic and fanciful but the independent supplier Co-operative Energy has made it a reality this week.

'Scrap the trap': calls for change grow as banks are told to play fair with loyal savers

City regulator says existing customers suffer worst rates

Motor insurers divided on proposals for whiplash ban

MPs want medical evidence for claims. Will this bring higher premiums?

British Gas repays £1m for mis-sold deals

British Gas was yesterday forced to pay back £1m to its customers after mis-selling them energy deals.

Bare necessities of life cost a pensioner £10,000

Pensioners now have to spend £10,387 a year on basic necessities such as food and fuel. new figures published today reveal.

Six months since its introduction, Obamacare has set market's pulse racing

As America's health reforms take effect, some firms look well placed to benefit, says Simon Read

Holidaymakers warned over hidden charges when opting to pay in sterling abroad

Fresh warnings emerged this week that overseas retailers and hotels aren't playing fair.

Employees will be able to request flexible hours in drive to make workplaces family friendly

From next week employees will be able to request changes to working hours. Rob Griffin weighs up the options

E2Energy's wind-turbine scheme offers green investors 7.5 per cent a year

If you're fed up with paltry returns on your savings and are interested in green energy, a new loan-based crowdfund launched this week could be a better home for your cash.

Why miss the chance of tax-free returns as Isas raise their game?

The tax-free limit of £15,000 is a big jump and rates for savers are starting to edge up, writes Simon Read
More and more trade drivers are falling prey to fraudsters

'Crash for cash' gangs target white van man

"Crash for cash" accidents are reaching record levels. The insurer Aviva trawled through its claims data to discover that fraudulent "slam-ons" – accidents deliberately caused in order that claims can be made for whiplash compensation – rose by 51 per cent in 2013.

Lenders lose their appetite for debt forgiveness

Banks may be getting tougher with people who fall into financial difficulties, a debt charity has warned. Statistics from The Money Charity reveal that the amount of personal debt written off by banks and building societies reached an all-time low during the first quarter of the year.

Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    BC2

    £50000 - £70000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

    Programme Support, Coms, Bristol, £300-350p/d

    £300 - £350 per day + competitive: Orgtel: My client, a leading bank, is curre...

    (Junior) IT Systems Administrator / Infrastructure Analyst

    £28000 - £32000 per annum + pension, 25 days holiday: Ashdown Group: A highly ...

    Finance Officer

    Negotiable: Randstad Education Birmingham: Randstad Education are seeking a Fi...

    Day In a Page

    A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

    A History of the First World War in 100 Moments

    Peace without magnanimity - the summit in a railway siding that ended the fighting
    Scottish independence: How the Commonwealth Games could swing the vote

    Scottish independence: How the Commonwealth Games could swing the vote

    In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
    Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

    A writer spends a night on the streets

    Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
    Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

    UK's railways are entering a new golden age

    New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
    Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

    Conchita becomes a 'bride' on Paris catwalk

    Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
    Pétanque World Championship in Marseilles hit by

    Pétanque 'world cup' hit by death threats

    This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
    Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

    Why did we stop eating whelks?

    Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
    10 best women's sunglasses

    In the shade: 10 best women's sunglasses

    From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
    Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

    World Cup final: Messi? Mascherano is key for Argentina...

    No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
    Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

    Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

    18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
    The true Gaza back-story that the Israelis aren’t telling this week

    The true Gaza back-story that the Israelis aren’t telling this week

    A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
    A History of the First World War in 100 Moments: The German people demand an end to the fighting

    A History of the First World War in 100 Moments

    The German people demand an end to the fighting
    New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

    New play reveals what Oscar Wilde said at trials

    For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
    Can scientists save the world's sea life from

    Can scientists save our sea life?

    By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
    Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

    Richard III review

    Martin Freeman’s psychotic monarch is big on mockery but wanting in malice