Why a financial midlife MOT could make a huge difference to your retirement

Recent reports suggest that Rishi Sunak is looking to introduce a personalised midlife “MOT” designed to gauge your financial health. 

Around 630,000 workers have left employment since 2019, with many of those taking early retirement as a result of the pandemic. 

It is hoped that the new assessment – into pension and employment options – will tempt older workers out of retirement and back into employment.

Whether you are approaching retirement, happily retired, or considering a return to the jobs market (or even the volunteer sector) professional financial advice will do much the same job as the new MOT.

Keep reading to find out whether an HDA MOT might be right for you.

Re-visiting your pension health is a good idea in a high-inflation climate 

Back in June, you might have read Budgeting for retirement: How much will you spend? in which we broke down potential retirement incomes and the lifestyles they would provide.

Since then, the Consumer Price Index (CPI) has continued to rise and the cost of living crisis looks set to continue through 2023. High inflation increases the cost of your household bills, eroding the buying power of your pension.

This changing economic climate has led to Which? updating their figures.

Source: Which?

To live a luxurious lifestyle as a couple, it is now anticipated that you will need an annual income of around £45,000.

“Luxurious” is said to include essentials like household bills and utilities, “comfortable” lifestyle elements like a recreation and leisure budget, plus long-haul flights and a new car every five years.

Whatever standard of living you expect in retirement, the current climate could have dented your plans. A midlife financial MOT, or a check-in with us here at HDA, could give you peace of mind that you are still on track.

A mid-life MOT might prompt you to consider the benefits of certain work opportunities

Work and Pension secretary Mel Stride is said to be looking to coax older professionals back into the workforce through a combination of “pairing” and voluntary placements.

If you have ever been tempted to use the skills acquired during your career to return to the work in a consultation role, the government’s “pairing” policy might appeal to you. It will look to pair retired professionals with small and medium-sized businesses in need of support and advice.

This could be a great way to share your decades of acquired knowledge directly with those most in need of it.

Likewise, if you have time and expertise but no financial need to return to work, you might opt for Stride’s plan to tempt you into the voluntary sector, giving your time to worthwhile causes.

As a recent retiree, you might have found the sudden transition away from work tough. The government wants its MOT to redress the balance.

The government hopes an MOT could help people on long-term sick leave return to work 

The third and final element of the government’s plans for a midlife financial MOT is to coax those on long-term sick leave back into work. How exactly the MOT will tackle this plan, though, isn’t yet known. 

What we do know at HDA is that not all benefits of financial advice are about your money. There can be a wellbeing element to knowing that your money is in safe hands and that your plans are on track.

In fact, MoneyAge reported back in 2020 that advice improved emotional wellbeing in the face of the coronavirus pandemic. It found that clients who received regular financial advice and built an ongoing relationship, felt more confident, more in control, and had greater peace of mind.

It also found that:

• 63% of advised clients felt financially secure and stable, compared to 48% of those not receiving advice.
• 32% of advised clients felt anxious about household finances, compared to 41% of non-advised responders.

If money worries are affecting your emotional wellbeing you could find yourself in a vicious circle, wherein anxiety makes a return to work difficult. Advice could help you to regain control of your finances, giving you confidence that you can withstand financial shocks, as well as peace of mind for the future.

Get in touch

Whether you are approaching retirement and worried about your finances or the cost of living crisis has made your early retirement less affordable, advice can help. 

A financial MOT in the form of a review can give you the confidence that your plans are still on track, and help you to tweak an existing plan if your priorities or circumstances have changed.

If you’re worried about any other aspect of your retirement plans, we can help. Please get in touch via email at enquiries@hda-ifa.co.uk or call 01242 514563.

Please note

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor. Workplace pensions are regulated by The Pension Regulator.