Talking to your parents about money isn't always easy. Many people feel uncomfortable discussing their finances, especially with their adult children. Older parents might see it as a reversal of roles and they may not want to open up about their specific financial situation. However, it's important to have honest conversations about money as your parents get older. In this article, we're sharing our top finance tips for older people and their grown up children.
Financial security is something we all aspire to have and to see our loved ones enjoy. However, according to a 2020 study by the Financial Code Authority, around 26% of UK adults have no pension savings. This means that one in four retirees within the UK will have to rely completely on a State Pension after they retire. This makes careful retirement planning all the more important.
Money Advice for Older People
The current State Pension sits at £208.85 per week (a little more than £10,000 per year). Without an additional private pension or life savings, elderly people could struggle to make ends meet throughout their retirement. These facts may seem bleak, but there are simple and effective finance tips that can help older people start planning for retirement early.
Remember, it's never too late to start planning, even if you're already approaching retirement. Here are eight simple finance tips for older people in 2024.
1. Save Save Save!
This may seem obvious. If you save and encourage your family to save, then there will be more money to enjoy when you really need it. We know that saving certainly is easier said than done. After all, things break, bills have to be paid, and "rainy days" often come around sooner than we expect. Nevertheless, we all know that "every little helps". Popping a little bit of money away every week or month will quickly add up and make a huge difference when it comes to retirement.
Here are some helpful finance tips on how to cut your costs and boost your saving power.
- Budget – Make sure you're aware of upcoming costs. If you know what you need to spend, you'll know what's left to save and this will make budgeting much easier.
- Look for deals and discounts – Most retailers (online and in-store) have regular sales, discount codes, and deals. Simply searching "voucher code" on any well-known search engine could save you money.
- Drink more water – Water has loads of health benefits, but it can also help you stop spending money on fizzy or hot drinks. Drinking water can even help you eat less. Having a glass of water before each meal helps you feel fuller for longer.
- Research – Websites such as the Money Saving Expert offer lots of regular tips including the latest money-saving deals. Make sure you stay up-to-date.
- Buy used – Don't be afraid to buy things second-hand, ex display, or pre-owned. Not everyone gets rid of things because they're broken – don't let yourself miss out on a bargain. Buying pre-owned from a charity shop can also help people in need.
It's also worth looking into benefits for the elderly. Even before you reach State Pension age, you could claim things like free or discounted travel, free eye tests and dental care, discounted senior tickets, and more.
You can find more tips in our post about 10 ways to help older relatives save money.
2. Reduce Bills
Bills are a necessary evil. They're no one's favourite topic, but they can pose a particular challenge to older people. Many retirees live on a fixed income, such as the State Pension. If bills fluctuate, it can be difficult to find extra cash. Therefore, it's essential to shop around for the best possible deals when it comes to household bills. It may be difficult for an elderly loved one to haggle or scour the internet for the best deals, so try to make sure you're there to help and, if necessary, make a call or two for them.
Remember, no matter which provider you choose to use, the service you're receiving is more than likely going to be the same. When it comes down to it, electricity and water all come from the same place; the main difference will be the customer service you receive. Don't be fooled by companies claiming they have something extra special.
Take a look at price comparison sites, which make it easy to compare tariffs. Money Saving Expert is a great place to find hints and tips and is regularly updated with good deals.
3. Start a Pension
In layman's terms, a pension is simply a pot of money that you put away for later life. Most people are entitled to a State Pension once they reach the State Pension age, but many people also have a personal or workplace pension. As we mentioned earlier, the State Pension currently stands at £208.85 per week – or £10,600.20 per year. In order to live more comfortably, older people will need to think about other sources of income.
Workplace Pensions
People who are still working have one less thing to worry about, as they will automatically be enrolled on a workplace pension scheme. By law, your employer must offer a pension scheme and make contributions if you are older than 22 and earn at least £10,000 per year.
Private Pensions
Another great option is to open a private pension. This is a lot like a workplace pension, except it's opened by the individual rather than their employer. Here are some benefits of a private pension:
- You can set up regular contributions (e.g. monthly or quarterly) or make one-off payments.
- You can have a private pension alongside a workplace pension.
- Other people can contribute to a private pension too. For example, you could contribute to a loved one's pension.
- Both private pensions and workplace pensions include tax relief. This means you'll only pay tax on contributions above the annual allowance of £40,000.
Check out our guide to the different types of pension.
4. Invest Money
Investing money carries a higher risk than your standard savings account but it can offer huge benefits. An investment can offer a lump sum when it comes to retirement or a steady income throughout. Savings accounts offer security and ease of access, but the returns can be small. In fact, the rate of interest will usually be lower than the rate of inflation, meaning that your savings will gradually decrease in value in real terms.
On the other hand, investments can offer a larger return but with no guarantees and much higher risk. Here are some things to remember:
- Risk – With every investment comes some risk. The bigger the risk, the bigger the potential reward. Having your money in a savings account is the safest way to protect your funds, but interest rates are typically lower than inflation so don't bring much return. In general, you shouldn't invest money that you can't afford to lose.
- Consider mixing investments – Generally, different asset classes don't do well at the same time. If you invest in a selection there is a higher chance you'll always have one investment doing well. This reduces the risk of your overall investments doing badly.
Read our guides on what you need to know before and the best ways of investing your money.
5. Plan Ahead
One of the best finance tips we can give you is to plan ahead. While none of us can predict the future, we can definitely make careful plans for the years to come. Talk to your parents about what they want to happen as they get older. For example, if they could no longer live at home by themselves, where would they want to live? Have they made a will? Do they have any money set aside to pay for any care they may need?
These can be tricky conversations to have, but it's essential to talk openly and honestly with your parents. Here are the most important topics to cover:
Power of Attorney
A power of attorney is a legal document that allows someone else to make important decisions on your behalf. You should talk to your parents about who they would want to act as their attorney, if they become unable to make certain decisions themselves. This could be on a temporary basis – for example, if they were in hospital and needed someone to pay rent or bills on their behalf. Alternatively, it could be a long-term solution for somebody who loses mental capacity due to a condition like dementia.
To learn more, read Plan Ahead: Power of Attorney.
Wills
Creating a will is just as important as arranging power of attorney. A will is a legal document that determines who will inherit your possessions and assets after you die, as well as who will look after any dependent children in your care. According to research by Royal London, a shocking 60% of adults in the UK do not have a valid will.
Setting up a will doesn't have to be a complicated process. You can choose to write your own will, although this is not advisable unless your finances are very simple. Alternatively, you can use a solicitor or a will-writing service. Solicitors tend to be the most expensive option, but they're worth considering if you have a complicated estate. This might be because you have children from a previous marriage, for example, or one or more properties worth lots of money. For most people, a will-writing service is perfectly suitable; it's cheaper than using a solicitor and more reliable than writing the will yourself.
It's also important to keep your will up to date. You'll need to review it if your circumstances change e.g. you get married or divorced, or your spouse/partner passes away.
To learn more, read Plan Ahead: Wills.
6. Prepare for the Worst
Talking about wills and funerals with your loved one can be an uncomfortable and depressing affair. Still, it's something you should discuss with your loved ones in advance. You should find out what kind of funeral your parents would want and whether they've set aside any money to pay for it already.
Funeral Costs in 2024
According to SunLife's Cost of Dying Report 2024, the average cost of a UK funeral is £4,141. This figure is lower than last year's report but still a lot of money to find. Costs to bear in mind include funeral director fees, local authority fees, and any extra costs such as burial or cremation, cemetery plot, ceremony, and wake.
It's usually the person or people arranging the funeral who have the responsibility of paying for it, but that's not to say that there aren't other financial resources available. If your loved one has funds in their estate, their funeral expenses can be claimed back from this, and some funeral directors will allow payment to be delayed until your loved one's estate has been unfrozen and divided.
If you receive certain benefits, you could be eligible for a funeral expenses payment to help cover certain costs. The payment won't usually cover the cost of the entire funeral, but it can be a massive help.
Find out more in How Much Does a Funeral Cost?
7. Insurance is Key
As a child or grandchild, one of the most important finance tips to share with your elderly relatives is life insurance. Not everybody needs a life insurance policy. However, anyone who has a partner, children, or other relatives who depend on their income should probably take out insurance. Life insurance will help provide for your family if the worst happens. The policy will release a sum of money upon the person's death, which the family can then use to pay the mortgage, cover funeral costs, and pay for general costs of living.
The cost of life insurance varies, depending on several different factors such as age, health, lifestyle choices, policy length, and the amount of money that is being covered. Behaviours like smoking or dangerous job roles will increase the premium. Life insurance is cheaper for younger and healthier people, so it's better to get it sorted sooner rather than later.
If you decide to take out life insurance, it's important to look around for the best policies. When taking out a new policy, a general recommendation is to cover around 10 times the annual income of the highest earner in the household.
Check out our insurance guide for more information.
8. Careline Alarms – A Top Finance Tip
One of the best finance tips that we can offer you would be to consider a Careline Alarm for ageing parents or grandparents, especially if they live alone or with a long-term health condition. As we age, many of us start having difficulty with everyday activities. As a result, older people are more likely to experience a fall or have a health scare. If and when an emergency happens, a Careline Alarm ensures that they can always call for help. What's more, a Careline alarm can end up saving you money in the long run.
Peace of Mind That Doesn't Cost the Earth
The Careline service is far more affordable than moving into care. The average cost of residential care in England is a staggering £60,320 per year. On the other hand, Careline365 alarms start at less than £145 per year on our annual plan. Most importantly, it allows your loved ones to carry on living in the comfort of their own home.
With a Careline alarm in place, one push of a button will send an alert to our 24-Hour Care Team. We will respond in under 5 seconds, on average, and arrange help for your loved one. The alarm user will be able to choose up to six emergency contacts to be called in the event of an emergency. The Care Team will also call the emergency services if they're needed.
Our alarms ensure that there is always help available, day or night. For more information about our service, please call 0800 030 8777, or complete our contact form and a member of our team will get in touch.
GPS Alarm for Loved Ones on the Go
For peace of mind wherever you go, choose the Careline GPS Alarm. This alarm contains a GPS locator, so users can call for help at home or while out and about. The alarm connects to our Care Team in as little as 5 seconds. With a Careline GPS Alarm, your parents and grandparents can continue living active, independent lives free from worry.
