A Crucial Decade: Financial Planning In Your 50s

As you sail into your 50s, it becomes pivotal to consider your financial strategy, with life having likely found a steady rhythm by now. Children are starting to take flight and become financially self-sufficient, and the idea of reducing work hours or even retiring completely starts to surface.

Each person’s life journey is unique and has different resources and challenges. However, there are shared goals and steps that you can take during this stage. Knowing where to begin can be daunting, whether you aim to maximise your earnings or lay down a robust financial plan.

Finding The Balance Between Cash and Investments

The key to financial stability lies in balancing cash and investments. We generally advise to have an emergency fund that can cover six months of living expenses and any planned spending, which provides a safety net for any unexpected events such as a job loss or significant sudden expenditures. However, the exact amount depends on factors such as employment security and expense levels. While it may be tempting to hoard cash, having too much idle money may not be the best strategy. For long-term goals, investing can offer the opportunity for your money to grow and outpace inflation.

Boosting Retirement Savings with Higher Earnings

As you enter your 50s, retirement planning should take centre stage. This period often comes with increased earnings, which, when channelled towards pension contributions, can yield extra benefits from tax relief. Determining how much capital you’ll need for the rest of your life can be challenging, but tools such as pension calculators can provide guidance.

If your income has increased compared to in your 30s or 40s, consider using the extra money to accelerate your retirement savings. This could be in the form of additional pension contributions, with options like a Self-Invested Personal Pension (SIPP) offering flexibility; our pension specialists can assist when investing into a SIPP.

Understanding State Pension Forecasts

The State Pension forms a significant part of most people’s retirement income. Yet, there’s often confusion about its specifics. In your 50s, it’s crucial to understand the rules for qualifying, how much you’ll receive and from what age. You can obtain a State Pension forecast from the government website here, (https://www. gov.uk/check-state-pension) which helps you understand how much you could get and how to increase it. Monitoring your National Insurance (NI) contribution record is also essential, and you can fill any gaps in contributions from the last six years through voluntary payments.

Weighing Mortgage Payments Against Investments

Deciding between paying off your mortgage or investing the money is a personal decision that involves considering factors such as your risk tolerance, financial goals and tax situation. If you’re risk-averse, you may prefer to pay off your mortgage quickly for peace of mind. On the other hand, investing could provide higher returns, especially for higher rate taxpayers making pension contributions if you’re open to taking some risks.

Downsizing could also be an option if you own a large home, especially considering your children may have started to move into their own properties. Downsizing could free up equity to fund your retirement and help reduces maintenance costs.

Planning For Succession and Inheritance Tax

As you age, it becomes increasingly important to plan for the future, particularly regarding passing on assets and managing Inheritance Tax. Even those who aren’t exceptionally wealthy may be subject to high levels of Inheritance Tax if not having planned accordingly. Inheritance tax is levied on the value of an estate upon the owner’s death, but there are ways to reduce this liability, such as making gifts or setting up trusts. Ensuring your Will is updated to reflect your current circumstances is also crucial.

Whether you’ve never quite got around to making a detailed personal financial plan or you need to make adjustments following a significant change in your personal circumstances, it’s never too late to build a firm financial foundation, and we can help.

Why not get in touch with one of our expert advisers for a free no-obligation chat, and we can guide you through this critical stage of your financial journey.


The value of investments and pensions (including property) and the income derived from them may go down as well as up.

The Tax Treatment depends on the individual circumstances of the investor and may be subject to change in the future.

The Financial Conduct Authority does not regulate on Estate Planning and Tax Planning