Personal finance expert shared vital advice on mortgages, pensions and life insurance for listeners approaching 50 on his BBC Podcast
Martin Lewis gave this advice to anyone who has turned or is about to turn 50(Image: ITV)
Martin Lewis has offered crucial guidance to anyone over 50, outlining essential steps people should take.
During his BBC Podcast this week, the personal finance guru took a call from a 49 year old listener asking what they needed to do at this stage of life to ensure financial security – and whether any adjustments were required.
The Money Saving Expert founder revealed there are two ‘major ones’ people must be conscious of, plus one form of assistance which ‘only becomes accessible’ at 50.
The caller mentioned they were approaching 50 and wondered if there was anything pressing they needed to address. Martin outlined several key areas people should consider regarding life insurance, mortgages and pensions.
Mr Lewis said: “I’m 53 so I’m in a relatively similar boat to you, a few years older. There’s nothing hard that is happening at 50. But you’re now 17 years away from state retirement age, I don’t know whether you will stop working, or not and we start to get into the perspective, sorry this is going to sound really depressing, where things that rely on being cheaper because you’re going to live a long time or be a long time with your good health span start to get more expensive.
“There are some easier ones to look at here. Term assurance. It’s a life insurance product that you would get to protect your loved ones in the event you were to die. Now the simple one to explain is level term insurance, that’s when you get a fixed amount of protection that will pay out if you die within a set time.”
Martin enquired whether the caller had children, and he confirmed one had just started university whilst the other is 16. Martin responded: “OK so actually what’s quite interesting there is your dependants are nearly not dependent any more or you’ve only got five or six years of that. I presume you have a partner as well, who you want to protect. Who’s the primary earner, you or your partner?”.
The caller revealed they earned roughly the same amount. Martin explained: “That makes it all quite simple because the standard rule is you would protect 10 times the highest earner’s income. So if you earned £10,000 a year and I hope you earn more, then it would be £100,000 that you would protect.
“The reason I mention that one is a lot of level term policies, you have a fixed cost and the longer you leave getting one, and I’m not sure you need to get one – you’d have to look at your own finances and what would happen if you were to pass away. The longer you leave it to get one, the more expensive it gets.
“You have other things like private medical insurance if you were going to get that, it gets a lot more expensive as you get older, but it’s quite difficult to do anything about that because premiums are reviewed each year.
“The two big ones, though. Mortgage.”
Martin queried the caller about mortgages and he explained he’d had to fix it after the Liz Truss budget sent rates skyrocketing. He said: “That cost us hugely, and part of the reason I’m asking is that when we did that, we looked to extend the term of the mortgage, and I was told that a 25-year mortgage would mean I was beyond state retirement, and therefore I couldn’t extend the term longer than we wanted to. We’ve got about 17 years left.”
Mr Lewis responded: “That’s not a hard rule that’s a lender rule. So there are other people who may not have done that. There are people who have mortgage terms that extend into their 80s and it’s something I would have gone to a mortgage broker with.”
The caller ended up fixing for five years and Mr Lewis added: “One of the things I say about fixing is don’t look back in anger. If you made a decision based on financial security, knowing exactly what you were going to pay and budgeting ability, then that’s quite useful.”
He continued: “The final thing is pension provision of course, and where you are with your State Pension. There is one interesting thing that will happen at 50. It’s the only think I could think of off the top of my head that actually changes at 50 and that is once you hit 50 you’re eligible to talk to Pensionwise to get one on one guidance about what you’re doing on your pension situation.
“You’re still a year from it at the moment. It’s certainly worth thinking at this point whether your pension provision is sufficient and I accept that you’ve got mortgage costs and two dependent children and all of those things that they stretch the family finances. You still have quite a long time yet to get that pension money in and a pension is still a relatively efficient way to save for your retirement living.”
Martin offered one final warning: “You know the scary thing about hitting 50? Once you hit 50 you’re nearer 100 than not.”
To use Pensionwise click here. To listen to Martin’s full podcast click here.