The realities of financial planning

The realities of financial planning

Much advice about financial planning is aimed at younger people, urging them to save for a home, for a family or even for retirement – all noble initiatives and all life stages that many of us go through.

The common perception is that the younger you are, the less financial acumen and experience you have and that financial knowledge and understanding only comes through age and experience. Whilst this may be true, many people, both young and old, find the subject of finance daunting and would rather not deal with it and the difficult issues that it can bring forth. However, we can’t exist without money and I’m sure most of us say we could do with more of it.

Younger people are often perceived to be more gung-ho when it comes to money and live in a consumer society that encourages a ‘buy now, pay later’ culture, irrespective of individuals’ financial situations. Consequently, many younger people find themselves with large debts that they have to pay off, whilst older people may be more accustomed to living within their means, making do and having more of a ‘if I haven’t got the money I won’t buy it’ attitude.

Is perception reality?

But is that perception of the nation’s finances actually reality? Well, the rather ambiguous answer to that question is yes and no!

Historically, people tend to earn the best money of their working lives from the age of 40 up to retirement. Prior to reaching middle age, people are trying to climb the career ladder and often see earnings start to rise, but slowly, and probably from a lower base point. Those of this age group, who have managed to save up and buy their own properties, or have moved away from the family home and are renting because the cost of buying is too prohibitive, tend to find that a disproportionate percentage of their income goes into paying for their property.

Then, when earnings start to rise, family matters kick in and children probably appear, which cause different demands on the finances. Children are expensive, a lifestyle starts to become ingrained and it has to be paid for.

This is achieved either through increased earnings or increased borrowings and most probably, a combination of the two.

Once people start to hit their fifties, then the financial good times should start to roll. Earning powers are at their peak, the cost and financial demands of children should be reducing and the thoughts of retirement should start to enter the financial thought process.

And then retirement comes along. This will raise different questions, such as whether your pension is enough to live comfortably or sustain your lifestyle.

What is the reality?

The reality is that the power to earn for most people rapidly declines, or even falls away completely, once retirement has been reached. This in itself brings different challenges. If you have been lucky enough to plan for your retirement, put money away, and have a decent pension, then financial worries won’t be so prevalent in your mind. However, if financial planning has been lacking, if you don’t have a pension or if you enter retirement with large debts, then the picture can be very different.

Many people, when they retire, find that they are asset rich but cash poor, with the vast majority of their wealth tied up in their property. This then brings other problems, such as how best to protect the value of assets, what arrangements need to be made to ensure that property is passed on to children and how to maintain your lifestyle with reduced cash income.

Then there is the question of divorce and second marriages, possibly with stepchildren coming into the equation. The number of people getting divorced and re-married later in life is on the increase, but with this comes increasing problems.

Arguably, therefore, the need for financial understanding and financial planning increases with age, as the above are complex questions that don’t have easy answers – in fact, every single person’s requirements, wishes and needs, will be different.


Then there is the disruptive nature of technology; something that financial services providers have been quick to embrace. Technology has the ability to save financial institutions money, but it also poses huge challenges for older people. Whether they are around accessibility, usability or simply just trust, they present more elements that need to be considered and taken on board.

We need to do something!

Doing nothing is not an option. Arguably, the older you get, the more important it is to get your finances in order. Whether that is to sort out your debts, if you still have them (around 1 in 8 older people are said to suffer from debt related financial problems) or whether it’s to sort out your income and make sure you have enough to live on.

It may be that you need to look at planning for care fees or for what happens should you become incapacitated, or for when you die. Or it might be that you want to know how best to protect your assets for your biological children and not your stepchildren.

Whatever it is, you can’t ignore your financial needs as you get older; the only solution is to take proper advice and make sure your finances are in the best health and the best order they can be.

A good place to start is the Citizen’s Advice Bureau – you can find out more by visiting their website at

By Andrew Silk