Wealth of choice

By SALLY HAMILTON
Updated:

 

YOUR fifties can be a 'full-time, full-on hedonistic quest for pleasure' according to one of the characters in the new BBC comedy, Manchild, in which men face up to mid-life crisis.

But the reality for most will be less exciting. Many people in their fifties have built up reasonable wealth - 27% of shareholders are aged 45 to 54 compared with just 10% aged between 25 and 34.

They feel richer as children leave home and the mortgage is paid off, but many have also passed their peak earning power and redundancy may be a looming threat.

Nikki Foster of independent adviser Chase de Vere in Bath, Somerset, says: 'Instead of allowing excess cash to lie in the building society earning low interest, they should top up pensions and investments, or even enjoy a bit of travelling.'

While planning holidays is a popular pastime for fiftysomethings, retirement planning should take priority. Improved life expectancy means retirement may last longer than your working life.

Here's what fiftysomethings should do: Retirement planning
FOSTER says: 'Don't just look at pensions, look at other investments that might bring in regular income, either now or when you retire. Also, with your pension, when you get within five years of retirement, consider moving your fund to lower risk with-profits or cash funds.'

Joyce Rahn of Norwich & Peterborough Financial Services says: 'We recommend this age group to maximise their equity Isa allowance and consider unit trusts as well.' A maximum of £7,000 per tax year may be invested in an equity-based Isa.

Pensions
PHILIPPA Gee of independent adviser Torquil Clark in Wolverhampton says a 50-year-old worker may invest up to 25% of annual income in a pension plan. From 51 to 55, that rises to 30%, and to 35% for those aged 56 to 60.

NON-WORKING PARTNERS
STAKEHOLDER pension rules mean that non-earners may invest up to £2,808 a year, which is topped up to £3,600 with Government tax relief.

Also, from 50 it is possible to take out a stakeholder pension with a lump sum and draw the pension shortly after.

Second homes
RAHN says: 'Many of this age group trade down to a smaller home, pay off the mortgage and often use any excess equity to buy a second home.'

Children
EVENTS such as weddings and the birth of grandchildren bring extra spending. Rahn says: 'Quite a few of our clients have taken out stakeholder pensions for their grandchildren.'

Tax planning
MORE people own their own business and view it as a pension fund. Gee says: 'They need to look at the tax planning consequences of selling the business.' It is worth considering life insurance to cover any inheritance tax liability.

John Lewis, 59, is enjoying his fifties despite a heart attack nine years ago. 'It was a warning to slow down,' he says. 'When the chance for early retirement came a few years later, I took it.'

His wife, Rosemary, 55, works for Lloyds TSB. 'We go on holiday as often as we can,' says John, from Bristol.

He has a portfolio of investments and a company pension. And because of his age he can take advantage of discounts from companies such as Saga. With their children grown up, they hope to move to a smaller house and pay off some, if not all, of their mortgage.

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