“Now what…?”

Simonne on how to make sure your future's a dream ...not a nightmare.

We love hearing about how Sheconomics changes lives. An inspiring review on Amazon recently told how it transformed one business woman's life. She cleared her debts and felt huge excitement about being back in control financially. 

Often clients are in crisis when they call up Simonne at Wise Monkey. She helps them plan their ‘debt free day’ and says it’s positively exhilarating when that day arrives and they suddenly look out at the expansive horizon and new possibilities.

But then, frequently, the next question is where do I go from here?

A little financial planning could help you achieve your big dream.

In answer to this question, Simonne has three suggestions:

Step 1) Build a contingency fund
When money is no longer going into debt repayments it can be all too tempting to rush out and spend it. Start to build an emergency reserve now so you don't plunge back into debt. Enough to live off for three months is ideal, saved somewhere accessible (e.g. in a cash ISA).

Build this fund by arranging a monthly direct debit to go out soon after you get paid.Then the money is automatically saved each month, before you can get your hands on it and spend it.

Step 2) Take a long view
Next look to that horizon and see how your financial future looks.

If you have an employee’s pension scheme review it regularly, especially the contribution rate. Sometimes the employer will match contributions up to a maximum limit. Simonne found that clients who were paying 1% of their salary into a pension pot, and the employer likewise, could get matched funding up to 8%. So by finding that extra 7% (as little as 4.2% after tax for higher rate taxpayers), they could be putting 14% more into their future.

In fact Simonne found one client for whom an extra £60 per month would result in having £238 per month invested (counting in the added contributions from her employer and top-ups from tax/national insurance savings)! Fortunately all companies are being forced to pay into pension schemes for their staff over the next few years through auto-enrolment. So check this out if you’re eligible.

Some people reduce their contributions during an expensive period in life, like buying a house or having a baby, then simply forget to increase them again.

And self-employed people, under the current rules, have to finance more of their future for themselves. Many of the self-employed hope their business will be their pension, but that can be risky. Starting to make small amounts of savings, with the power of compound interest, can make a big difference.

Simonne says it’s all about having a strategy and not necessarily at any extra cost. With some careful strategic planning now you can make a massive difference to your financial future.

Step 3) Mind the gap

Most people's financial strategy is to drift along, put a bit of money aside when they can and hope for the best. But doing some simple maths could take your future planning a step further: 

A = Assess where you’ll be a a future date. Maybe the mortgage will be paid off and the kids might even be off your hands? Work out how much income you'll need per month in today’s terms.
B = Then simply check out what state pension you'll get, and any company pension. And add in any other income, or circumstances, such as a property downgrade for instance.
Calculate A – B and you've got your shortfall

Once you know your shortfall online pension calculators show you what you would need to be saving to generate enough to provide the income you identified at A.

Pensions are boring and the future's a long way off, right? 

If that's how you feel, think of it instead as a gift to your future self. 

‘Know tomorrow comes’ is the 7^th Law of Sheconomics. That needn’t be all doom and gloom. See it as a gift to the woman you’ll be in 10, 20,30 years time. Look after her, make sure she’s ok, and she’ll be immensely grateful to you. The steps you take now could dramatically effect whether her life is a dream .... or a nightmare.

What can be more exciting than knowing the dream life you want in the future ... and planning how to get there?

Affected by the changes to women's pension age?

Simonne brings us up to date on the changes to women's pensions: 

Many women are not so happy about the planned changes....

Women's finances have been in the news again recently.

As we know the age at which women qualify for a state pension is gradually increasing.  And the government has proposed to bring forward the change to retirement age faster than originally planned (as we reported in our Sheconomics February blog).

Back in October 2010, the government announced that it would bring forward the date that the state pension age would become 66 for men and women. This caused widespread concern that it would unfairly impact on women already in their late 50s. Many would have to work up to two years longer than they had planned for.

The latest news is that the Government have responded by postponing these changes for 6 months (to October 2010, instead of April 2010) so that the maximum delay that women will experience will be 18 months instead of two years.

While this is some concession, 18 months is still a long time to wait, with little time between now and state retirement age to plan how to make up for that financial loss.

If you feel that the state pension age rise is unfair and would like to do something about it, Saga are asking for signatures on their petition to lobby the government on these proposed changes to the state pension age.

Click here for an online calculator to help you work out when you're likely to reach state pension age under current rules.

Still confused? If you need a money coach don't forget to check out Simonne's website.

Do yourself a favour and Lily will do one for others!

I love the idea behind bolder.is.

Not only is it all about getting people to Do Something Different (a technique we use all the time in our behaviour change work). It's also about people issuing challenges to others and giving something in return.

http://bolder.is/challenge/192/

So this lovely lady, Lily, will donate $1 to Meals on Wheels for every person who takes the 'Save for Retirement Challenge'. 


Her message is straightforward and applies to us in the UK as well as those Americans:

"Start saving now and it'll add up pretty fast (compound interest is a miracle!). Nearly half of today's Americans are at risk for being unable to maintain their current standard of living in retirement. Saving now - even a little bit - makes a difference"


Why not take her up on it - or issue a challenge of your own?

The Girl with her Head in the Sand

Imagine this. 

You meet the love of your life and spend 30 blissful years together. He's a writer and has a few novels tucked in his desk drawer; he jokes that one day they’ll pay for your dream home in the country.

You are partners in every sense of the word, with a shared language and often research his books together. But you never get round to marrying.

Then at the age of just 50 he drops down dead. Suddenly his (previously estranged) family appear to claim their entitlement to half of the apartment in which you live. When your lover’s books are published posthumously, earning millions, it’s his family who are the legal heirs to the fortune. You don’t even figure in the picture.

This is what happened to Eva Gabrielsson the woman who was the life partner of Stieg Larsson, author of books including The Girl with The Dragon Tattoo and a global sensation. Eva is currently fighting a legal battle for control of Larsson’s literary estate and campaigning for a change in Swedish law.*

Although Eva describes herself as a feminist, like many women she left the financial affairs to her partner. Sadly Stieg didn’t set up a company to manage their joint assets, as he’d promised. And Eva didn’t find that out until it was too late.

Eva wasn’t unusual in failing to secure her own financial future and being a bit ignorant about their joint finances and her rights.  

In fact, as many as nine out of ten women in relationships prefer the ostrich position and don’t get involved in financial planning.

Yet women have a 70% chance of becoming solely responsible for their own financial well-being

 (through divorce, death of partner etc.)

Is this you?

• Are you ignorant about your joint finances?
• Do you just assume ‘things will be taken care of’ in the event of death or disaster?
• If you are an unmarried co-habitee, do you know what your inheritance rights are?
• If you got divorced (in most divorces women come off worse than men) how would you manage? And do you know what pension rights would be?
• Are you spending your money on your children instead of on your own future? (we’ve heard of women cashing in their pensions to help their off-spring to buy a home). 
• Is it time to do something different and put yourself first?

We hope you never have to wait for disaster to strike before the state of your finances is revealed as inadequate. 

In Sheconomics we give lots of tips on how to innoculate your finances against future adversity. 

Best to do it now -  then you can get on with enjoying your life!

*Eva has written a book about her campaign: Stieg and me: Memories of my life with Stieg Larsson (Orion £12.99).

Are you financially prepared for retirement?

THANKS TO CERI WHEELDON FOR THIS GUEST BLOG.
Ceri's website www.fabafterfifty.com is packed full of articles, tips and advice for women celebrating being over 50 and feeling fab!


When facing retirement are we ever really ready?

With life expectancy increasing, and one in 7 women turning 50 this year likely to live to be 100, traditional retirement may be a thing of the past. 

Today, retirement presents an opportunity to ’relaunch’ our lives. It is important to be confident about your outlook and passionate about what lies ahead:

• When planning your retirement, set yourself a monthly budget equal to your projected  retirement income and try to live on it. Be realistic about  what your monthly expenditure is likely to be. You may be spending less on commuting daily, but you will have more leisure time and increased socialising normally means more expense! Not to mention that you will now have the time for all that travelling you didn’t quite get round to.
• Think about the financial  ‘benefits’ you may be losing such as private health cover and  life insurance- if these have been funded by your employer you will need to check out the costs of buying the cover privately.
• Make sure you have a complete picture of your financial situation- ask for current figures on your pension plans to have a realistic picture of what level of income your current pension  will deliver. Worryingly according to the Office of National Statistics It seems that the average pot for 56 year old women living in the UK stands at only £9,100.  This would generate an approximate income of around only £550 a year.

Recent changes to pension legislation also mean that women have to wait longer before being eligible to draw their state pension; women's state pension age rises to 65 by November 2018, and then to 66 by 6 April 2020.

If  you realise that you can’t really afford to fully retire as planned, look at the options available to you- do you want to work part-time?  93% of the new jobs created in the last 12 months are part-time so in theory this should work to your advantage.

If you need to look for full-time employment are your skills up to date?  Do you need to attend any training courses- have you budgeted for these? Are there any evening classes you can attend to fill any skills gap you feel you may have?

Also, once you reach state pension age, should you continue to work you cease to pay national insurance contributions, giving you an extra opportunity to save!

Have you always had a yearning to be your own boss? Now could be the time to set up your own business.  Statistics show that more businesses set up by the over 50s succeed than businesses founded by the under 30s. If you build up a business with the potential to be sold, as well providing an immediate income stream it could also provide you with a lump sum at a later date.

It’s never to early to start planning for retirement!

Thanks Ceri for reminding us that, if we prepare for retirement, we can look forward to so much more than a bus pass and a shopping trolley... as the inspiring stories on the www.fabafterfifty.com website testify.

Women's state pension age delays

The Government has just published its timetable for raising the state pension age faster than previously planned.

More women will have to wait longer before being
 able to splash out their pension money.

Most women face a delay of a year, picking up their pension book at 66 rather than 65 years of age. However, more than half a million women face a delay of over a year. Of those, 300,000 face a delay of more than 18 months and 33,000 a delay of two years.

Click HERE to see the old and new dates for women born on 6 April 1953 to 5 April 1959.

A woman's pension age also sets the qualifying age at which she can claim pension credit, winter fuel payment and free bus passes in England. If we needed another reason to provide for our own retirement and not depend on the state, here's one.


Story from BBC NEWS: http://news.bbc.co.uk/go/pr/fr/-/1/hi/programmes/moneybox/9119246.stm