Where's the MOT for our finances?
WHICH of the following is going to last longer: your car or your wealth?
The law looks after your car by demanding an MOT every year, but there's no MOT for our finances. When it comes to our money we are left to ourselves.
This is more important than ever, when you consider that our working lives are not what they used to be. We are getting healthier, we are living longer, we are having longer retirements, and our working lives are getting longer, too. We live in an aging workforce.
The working population of the UK is now 32.6 million people, an all-time record, according to the recent Labour Force Survey by the Office for National Statistics. But did you know that it's the over-50s that are driving that growth?
That total workforce is up by 444,000 compared to a year ago, and 70 per cent of those people are over 50. In fact, there are now a record 10.4 million over-50s at work, and Aviva expects they'll make up a third of all workers in 10 years' time.
To look at it from the other side, we can look at those who are ‘economically inactive' – aged 16-64 but not working and not seeking to work. As the workforce grows, the numbers of economically inactive has been declining for three decades, and is now at a record low, at just 20.9 per cent of the workforce.
There are also less people under 65 who define themselves as ‘retired', in fact numbers there fell by 39,000 in the last year. Women in particular are having longer working lives – the number of women under 65 who say they are retired is at the record low of 642,000.
The idea of an early retirement is, increasingly, not an option as people come to realise they can't afford to retire yet, they need to stay in the workplace to maintain a standard of living, and keep saving.
Aviva is leading the way in accepting this new working ethos. Responding to the above ONI figures they have just announced they'll be introducing Mid-Life-MOTs for workers over 45.
A mid-life financial review looks at all the building bricks that ensure our long-term wealth. It is a great model for all of us, no matter where we work.
An independent adviser can analyse our workplace or personal pension, to ensure our underlying investments are right to ensure maximum growth. We know that many people who do not review their pension regularly (at least annually) risk their cash being invested in underperforming funds, which can reduce their savings growth in the longer term. You can't take your eye off the ball, where your retirement cash is concerned!
Then of course, whether or not you are striving to work for longer, it's wise to limit interruptions to your saving years. This could happen if you lost your income, for a few years or even longer, due to a severe health setback.
MacMillan Cancer Support constantly remind us more than half of us will get some form of cancer in our lives. There are also seven million people with a heart and circulatory disease, who are at high risk of heart attack.
Despite this, research shows only one in 10 of us have insured ourselves against major diseases with critical illness insurance (CI). Legal & General have said that the average age for claims for critical illness is just 47, so would a mid-life MOT be the perfect time to consider insuring your health?
Then of course there are the ‘standard' and much more common elements of everyone's financial life, from life insurance to provide for your family when you die, to general savings products including the 6 types of Isa now available.
You might also seize the chance to make a will, and make sure your inheritance planning is set up for maximum efficiency in transferring your property and wealth to your chosen beneficiaries.
If you're in your late 30s or older, isn't now the time for a mid-life MOT? As the old saying goes “If it's to be, it's up to me.”
:: Michael Kennedy and Shaun Doherty are independent financial advisers and pensions specialists, and can be contacted on 02871886005 . Further information on Facebook at Kennedy Independent Financial Advice Ltd or at www.mkennedyfinancial.com