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HOW TO PRIORITISE DEBT PAYMENTS / PENSIONS WHEN YOU REACH RETIREMENT

Published on:March 7, 2014Author:The Debt Advisor

What should you financially prioritise if you are single later in life?

Here at The Debt Advisor, we are seeing an increase in the number of mature people, especially those who are single, maybe through divorce or bereavement who are looking to settle debts by raising funds against their properties using specialist retirement mortgages or quality release schemes.

Our Insolvency Practitioner and Managing Director of The Debt Advisor, Bev Budsworth thinks that this is worrying, as people are using a sizeable chunk of the equity in their property to clear sizeable debts when really this should be used to fund their retirement.

Bev recommends that if people do have substantial debt later in life, they don’t use the equity in their property to clear it as this could leave them seriously under-funded in their retirement. Instead, she would suggest that a more appropriate solution would be to clear their debts using a managed plan such as a‘Protocol Compliant Debt Management Plan’.

If such a plan is suitable, there will be no up-front fees and it will allow the individual to become debt free in 10 years, keeping the equity in their property to help fund a long, happy retirement.

Should you prioritise debts before investments?

Bev suggests that this very much depends on the size and scale of the debt. If it’s manageable debt that you can afford to make the payments on each month, then this should not deter you from making investments or provisions for your retirement.

Pension provision should always be a priority – it’s vital for a healthy, happy retirement. I would always recommend that people make adequate contributions to their pension pots even if they are on a formal debt repayment plan or even if they are declared bankrupt!

However, when debt becomes unmanageable, it then becomes priority. If, by repaying your debts each month, you don’t have enough to heat the house or put food on table then you really need to get help.

What should you do if you are facing debt alone?

It’s always more daunting to face debt alone, especially later on in life. The key here is to make sure you have someone you can talk to about your issues.

Never be in denial about debt problems they will only get worse this way. Don’t bury your head in the sand, find someone you can trust whether it be a family friend or a neighbour to discuss your problems with – a problem shared is most definitely a problem halved.

Learn to budget with your spending. It may seem a little strange at first but it’s a very useful tool to show you where your money is going and empowers you to do something about it.

If you don’t feel you can budget or don’t know how to, take advice, there’s plenty of help out there from both charities and insolvency practitioners alike, so don’t suffer in silence.

If you’re struggling with debt, call us today to discuss the options that are available to you.

The Debt Advisor can advise on all kinds of debt solutions such as Debt Management Plans, Individual Voluntary Arrangements (IVA) and Bankruptcy.

We are regulated by both DEMSA and DRF and we adhere to their codes and standards.

Call us today on 0800 0851 825 to speak with one of our advisors. If you’re calling from a mobile you can reach us on 0161 868 2500.