Over 70? 2 common financial mistakes to avoid in later life

7 August 2024

We often provide written insights about financial planning for those who are on the cusp of retirement, or who have recently retired.

But as financial planners, we often meet older clients who have passed the milestone of turning 70 and are wondering: “What’s next?”

If you are unsure about how your financial plan should look after 70, you aren’t alone. Making important financial decisions without professional advice could lead to financial stress during a time that should be spent reaping the rewards of your hard work.

So, keep reading to learn two common mistakes over-70s make when it comes to money, plus how bespoke financial planning could help you form a financial plan in later life.

1. Overspending

You could have reached your current age and begun to assume that you’re near to the end of your life. While this comes with many complex emotions, from a financial perspective this mindset could prompt you to overlook your budget and spend more.

In fact, on average, you could have at least a decade left to enjoy time with your family and pursue any remaining goals. The Office for National Statistics (ONS) life expectancy calculator says that:

• A man who turned 75 in 2024 has a life expectancy of 82, and a 1 in 4 chance of living to 92.
• A woman who turned 75 in 2024 has a life expectancy of 89, and a 1 in 4 chance of living to 94.

Further to this, the Pensions and Lifetime Savings Association (PLSA) released figures stating that the cost of a comfortable retirement is now £59,000 a year for a couple or £43,100 for a single person.

As an example, imagine a woman who is 75 years old. Her husband passed away last year, and she assumes that she too is coming to the end of her life. She decides to relax her budget and spend at will, not realising that she could be required to fund a further 14 years of retirement if she reaches her life expectancy. According to the PLSA’s figures, funding her lifestyle for another 14 years could cost a total of £603,400.

While these examples may not consider your own unique circumstances, it may be wise to use them as a benchmark with which to measure your remaining wealth.

If you’re unsure whether you have enough to live on for the rest of your life, it could be wise to talk to a financial planner. We can review your financial circumstances and offer accurate projections that may help you enjoy life without overspending in your 70s and beyond.

2. Not having a financial Lasting Power of Attorney

There are two types of Lasting Power of Attorney (LPA): financial, and health and wellbeing. Each one allows you to nominate a person, or people, known as your “attorney”, who can make decisions on your behalf.

Typically, you might benefit from having a financial LPA in two situations:

• You lose mental capacity. This could occur if you became ill with a cognitive disease, such as dementia, or were involved in an accident that caused brain damage.
• You decide to take a step back from major financial decisions. Some people prefer for their adult children, or another trusted individual, to manage their money as they get older.

You might recall that the subject of LPAs came up in the news when Derek Draper, husband of ITV journalist Kate Garraway, sadly went into a coma after contracting Covid-19.

Derek did not have a financial LPA in place, and as his next of kin, Kate expected to be able to access all his financial information due to his illness – but she was unable to. Only someone with an LPA can act on your behalf financially, and sadly, their situation led to much undue distress for Derek’s whole family.

So, if you have entered your 70s without an LPA, now is the time to consider registering one. It’s easy to do and takes little time – you can register yours through the government website for just £82.

Selecting a trusted attorney to act in your best interests if you were to become too ill to make your own decisions could bring you great peace of mind. Or, if you feel the time has come to hand the reins to the younger generation, an LPA gives your attorney the right to access your documents and make choices that align with your wishes.

For instance, if you were diagnosed with dementia, your attorney could access your accounts and ensure you are able to pay for the care you need. If necessary, they could sell properties or liquidate investments to cover these costs. If you had wishes regarding your care – such as, if you had put money aside specifically for nursing home costs – your attorney can make every effort to meet them.

This is just one of countless examples in which an LPA could prevent you and your family from experiencing financial distress in later life.

A financial planner can help you to register your LPA. We’ll talk you through the rules and regulations surrounding this important document, and speak to your nominated attorney(s) about their role if you wish.

The Financial Conduct Authority does not regulate Lasting Powers of Attorney.

Get in touch to find out more about the benefits of financial planning in later life

When it comes to financial planning over 70, there is so much to consider on top of the subjects you’ve read about here.

Your will, pensions, investments, properties, and Inheritance Tax (IHT) plans all come into the picture too – and it can be difficult to juggle all these elements on your own.

Our team are here to provide bespoke financial planning to people of all ages. To speak to a professional, email info@depledgeswm.com or call 0161 8080200.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available.