SIMONNE SAYS

Fearful of financial storm clouds ahead? Want to make the most of your money? Top financial coach, Simonne Gnessen starts a monthly column with advice on planning for retirement when the pot seems uncomfortably bare.

Julia from Edmonton, asks:
I’m 59, a widow with three children and two grandchildren. I’ve worked part-time most of my life and have a small pension of my own and will start to get some state pension – though I don’t think I’ll get a full one. I’d like to give up work as a school secretary as I’m increasingly called on to look after grandchildren. But I don’t want to be financially dependent on my children.

Simonne says:
You’re not alone. Women consider financial security as one of their main priorities in life yet up to 4.5 million working women are not saving enough for retirement and the same number again are not saving at all.

Like most women, you’ve probably taken time off work to care for your children and that will have affected both your earnings and your pension. That means you need to save a bigger proportion of your income just to achieve the same retirement pot as men – though the reality is that you’re more likely to have spent your disposable income on the children rather than putting it into a pension for yourself. That’s why a growing number of women are working longer, into their 50s and beyond.

The first thing to do is get a forecast of your state pension, to check if you’re up to date with your national insurance contributions. This means you won’t be faced with a nasty surprise when you receive your state pension next year. It may well make sense for you to top up your state pension by paying voluntary contributions to make sure you qualify for the full amount. You can get a forecast from the Pensions Service (part of the DWP) via the following link: .
http://www.thepensionservice.gov.uk/atoz/atozdetailed/rpforecast.asp

The next thing is to consider what income you need when you stop work in today's terms - maybe on a monthly basis. It’s a matter of looking at your expenses and trying to guesstimate what will change once you stop work. You might need some help with this - when looking for advice on your finances, make sure you can talk to someone who will listen to you, someone you can trust, and who explains things, clearly, without jargon.

But if you take time and a bit of trouble, you should be able to do the sums yourself. Start off by listing what you’ve got and, if appropriate, when they’re due to be paid: your state pension forecast plus any other pension you may have, whether they’re private or occupational. If you have a private pension, you can get a rough estimate of how much income it’s likely to pay when you plan to retire in today’s terms by using the following online calculator: http://www.pensioncalculator.org.uk/ . If you have an occupational pension you should have a statement that tells you in today's terms what income to expect and when that's due to be paid; if not, ask for one.

Then look at other sources of income: perhaps you plan to realise some capital to generate extra income by downsizing your home or you have some other investments which will produce additional income. This will highlight whether there’s any shortfall between your income needs when you retire and what your income is likely to be at that time. Only then can you see whether you can really afford to retire or whether it’s better for you to delay it for another few years and try to add to your pension pot in the meantime. The online pension calculator can estimate how much extra you’d need to save in order to reach the target income.

The worst option, as always, is to bury your head in the sand. Take time now for financial planning and at the very least, you will know exactly what’s in store for you so that you can prepare for all eventualities.

Simonne Gnessen is a financial coach.  She set up Wise Monkey Financial Coaching (www.financial-coaching.co.uk) six years ago , after working as a qualified independent financial adviser for ten years

If you’ve got a question for Simonne, send it to simonne@laterlife.com

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