Saving when you’re broke and over 50 may seem impossible. You’re either still in work and trying to put whatever you can into your pension pot, or already drawing down from your pension for an income much lower than you’re used to.
Having no savings and a small income, and knowing your retirement is coming up, leaves many over-50s worrying about how they can save for a rainy day. We’ve come up with some solutions to help you build a savings pot even when you think you’re broke.
- Get the over-50s benefits you’re entitled to
- Put off retiring
- Create some over-50s savings
- Invest for the medium-term
- Pick up some over-50s extra earners
- Make extra savings
- Consider equity release
So, you’re over-50, feeling poor and see no hope of improving the situation? Stop right there because you have a lot more time – and opportunities – to turn this around than you might think. Don’t imagine that this is a time for you to slow down. No way – there’s too much of life to enjoy and, frankly, profit from.
Get started with our ideas on how to save if you’re broke and start building up that nest egg!
Go to the benefits information website Turn2Us and fill in your details. It works out what benefits you should be getting. It also shows you how to apply for what you’re entitled to.
Also go to the benefits section of Directgov. They have a good list of the benefits and tax credits you could be entitled to. You could be getting tax credits if you’re not earning enough, or extra help if you’re caring for someone or have a disability. Get in now while you can – who knows how long these benefits and tax credits will continue!
Most benefits are now paid via the Universal Credit system. This means you need to apply online to get the benefits. If you’re not confident on a computer, make an appointment with your local Citizen’s Advice Bureau and they’ll help you. The DWP also has a Visiting Team who can come out to your home if you’re housebound or unable to claim your benefits online. They’ll make sure you’re getting everything you’re entitled to.
While you’re at it, it’s a good idea to check on your state pension situation. Do you have enough National Insurance credits to get the full pension? You need 30 years’ worth of contributions to qualify for the full state pension. Also, if you’ve been a carer or taken time off to look after children you will probably have National Insurance credits for those years. Find out what your situation is here.
This may not have you jumping for joy but you’re going to have to face it now: if you don’t have enough savings put by, you’re much better off working for a few more years (probably until you’re 70) than trying to live off the State Pension alone. The current full State Pension is £6,718 per year; a recent report suggested a retired person needs a minimum of £10,000 a year and £20,000 a year to live comfortably.
Working more years gives you time to add to your pension pot – and means you’re not eating into your pension savings while you’re still working, too, leaving more for when you do retire!
There are various advantages to working longer anyway:
- You are more likely to live longer. Seriously. This is particularly true for men. Staying in work – or at least staying active and interested in life (which often comes with having to go out to work) helps keep us healthy. A study by BUPA found that survival rates improve with increasing age at retirement for people from all socio-economic groups.
- It’s a great way to meet people. Again, getting out of the house and into contact with others will cut down on feelings of loneliness, isolation or worthlessness which can be common in retirement.
- You could find a whole new lease of life. You don’t have to carry on doing whatever job it is that you do now. This is a great time to find a new career path and do something you’ve always wanted to do. For women fifty plus, being a doula, for example, is a great new career. For men fifty plus, one idea is to get into adult education, teaching the skills you’ve been using (and are probably still using) for all your career.
- It keeps you young. Of course, it depends what you’re doing but most jobs involve keeping active to a certain extent, maybe walking to the station to get there, having to pick work clothes that make us look good, making sure we’re well-groomed etc. You can’t just sit in your slippers and watch TV all day!
- You get to earn more. Once you’re over 65 you have a higher tax threshold and you don’t pay National Insurance contributions. This means that you get to take home more actual, real money from your salary. The government doesn’t pilfer so much of it!
- Putting off claiming your State Pension means you could get a larger weekly amount when you do take it. Your weekly pension increases by 5.8% for every year you defer.
- Alternatively, you can choose to take a cash lump sum with interest instead, as long as you have deferred it for more than a year.
- Don’t think that working past retirement age means you have to stay in the 9-5 rat race. Lots of shops and small businesses offer part-time work which means you could work for a few hours a day, several days a week.
- Finally, you can work and claim your State Pension at the same time to boost your income. You can also use your State Pension to keep the same amount of money coming in each month but reduce the hours you work.
Go to this section on Directgov to find out about other benefits of putting off retirement.
Now this is the important part. At this stage of your life you need to be creating a stable savings base. You do have time to invest in more risky, volatile investments that should bring in a decent return year-on-year (see below for more information on how to do that) but at this point you primarily need stability.
Saving when you’re broke means working out where you can make cuts in your existing expenditure, or finding new ways to earn money. Even saving a small amount each month quickly adds up! Keep reading for tips on how to earn more money when you’re over 50.
This means that you should be concentrating on putting regular amounts of money (however small) into savings accounts and probably into gilts too. Check out our article on investing when you’re 50+ for more details – or keep reading for the quick guide below.
If you have no extra money each week/month to put into a savings account: take a look at our article on how to save when you don’t have any money for ideas.
Set up a monthly standing order from your current account into a savings account: Even if it’s just £20 a month, it’s still something going into a savings scheme for you. Choosing a regular savings account is a good option; the best ones offer a 12-month fixed rate of about 5% interest and won’t allow withdrawals – a good way to stop you being tempted to dip into your money!
Don’t forget about your ISA allowance: see the best rates for cash ISAs here, and read on for information about investing in a stocks and shares ISA.
There’s also gilts: That’s government bonds to you and me. These are effectively loans to the government where they promise to pay a fixed amount of interest each year in return for borrowing your money to pay for… well, goodness knows what they’re using it for right now!
The point about gilts as an investment is that they are also stable, like savings accounts, and although (like savings accounts) they don’t give a huge return, at least you know that your money is in relatively safe hands.
It’s not going to go up and down wildly in the short term like the stock market can do, but you could make fairly decent returns. Read our article on gilts here.
If you have decided to put off retirement until you’re about 70 then you have a decent amount of time for slightly riskier investments to grow.
A word of warning! You have to be careful here. Although you have a good few years for your investments to grow and to take in the ups and downs of more volatile markets than, say, savings accounts and gilts, as you’re not in your twenties any longer you need to make sure that only a relatively small percentage of your money is going into these riskier products.
Saving when you’re broke and over 50 means the majority of your money should go into the stable savings, particularly if you are close to, or well into, your sixties now.
Stocks and shares: It’s still worth looking at stocks and shares if you’re in your fifties. Use all or part of your ISA allowance to invest in stocks and shares ISAs. Invest in a nice, cheap, easy index-tracking fund (tracker) such as the Legal & General FTSE 100 or FTSE All Share index tracker.
These go up and down with the stock market according to a clever computer programme. Trackers don’t charge much in the way of management fees because they’re run by computer so you get to keep more of the profits.
Pensions: Your employer now has to offer a pension scheme by law. You’ll have been auto-enrolled if you meet the minimum requirements – make sure to check you’re taking this pension scheme if you can!
The Government tops up your pension contributions, and your savings are put into the pot before tax – unlike money you choose to save from your pay cheque.
If you don’t have access to a company pension scheme, such as if you’re self-employed, you could set up your own private pension or two. The best types of private pensions are either stakeholders (cheap, easy, open to anyone) or SIPPs, Self-Invested Personal Pension (rather cleverer but a great idea if you have the confidence).
You don’t have to put any money in a pension but as it’s a good idea to spread your money around a few different kinds of products, it’s worth considering pensions as one of them.
Find out more about stakeholder pensions here and read our article on SIPPs here to find out more about how to invest in them.
Do remember that there are whole chapters on investing in stocks and shares, gilts, bonds, pensions and savings accounts in Jasmine’s latest book ‘Beat the Banks’.
It’s all very well investing your money if you have some cash to spare, but what can you do if you don’t? Luckily there are plenty of things that over-50s can do to make extra cash on the side to make saving when you’re broke possible.
Can you play an instrument? Speak another language? Or have specialist knowledge of science or maths? If so then you can make money by teaching high school, college or even university students. Here at Moneymagpie we know this is a good way to make money, and we have known people who have made up to £25 an hour by tutoring GCSE students.
Gumtree is a good website to place an advert. Using an online site like this to advertise your services also means you can check out how high other tutors are pricing themselves so that you know how to price yourself.
Become a doula
A doula is a someone who is paid to help a woman through her pregnancy and during her first few months after the baby is born. You do not need any qualifications to become a doula, but in order to give yourself some credibility you may want to join up to a website or agency that has a good reputation, such as British Doulas or the Scottish Doula Network. To learn more about becoming a doula read our article here.
Rent your spare room
If your children have all moved out, gone to university or you simply have a lovely big house, then you can make some extra money by renting out your spare rooms. You don’t have to turn your house into a hotel or B&B, just clear some cupboard and fridge space and make room for another toothbrush in the bathroom.
You could rent to students during term time if you live near a university, or to commuters Monday to Fridays if you live in a big city. If you live in a desirable area you could also rent rooms to tourists during the summer or at Christmas.
Spareroom is a really easy site to use and their basic package is free, just place an advert and wait for people to contact you. You can select what age and profession you would like your tenant to be so people don’t waste your time applying if they do not fit your specification.
Renting a room means you can earn up to £7,500 per year tax-free. Couples share this allowance, so won’t get twice the allowance for the same property. You can’t use this scheme if you’ve converted part of your home into a separate annexe: it has to be used for lodgers sharing facilities with you such as kitchens and living areas.
Also, remember your driveway and your garage. You could put those for rent on JustPark, Parklet and your local version of Gumtree.
Become a house sitter
House sitting is, basically, looking after someone’s home while they are away. You get to stay in a house; to keep it clean, tidy, take phone messages and collect post, perhaps look after pets, and sometimes house owners are willing to pay you to stay.
This is where the over 50s and 60s can cash in. Websites like trustedhousesitters.com ONLY let mature people sign up to their websites, as they want to reassure their customers that their house sitters are reliable.
So, even if you aren’t being paid to look after a house, it’s a good way to save money if you want to go on holiday, as you will be saving yourself the cost of accommodation.
Trusted housesitters also have houses all over the world, not just in the UK. So if you fancy a holiday abroad, you could save yourselves a lot of money by offering to house sit.
There are also lots of things you can do day to day that will save you money in and around your home.
Switch (or ditch) the car
If the taxi rank of mum and dad has now closed down, and your kids have all flown the nest – or are driving themselves around (at your expense) instead – it might be time to trade in the family car for a smaller, more wallet-friendly model. You’ll save money on petrol and insurance that way too.
It is also a good idea to shop about when you are looking for a new insurance premium. Check out our price comparison tool below – it does all the hard work for you!
Or, you could be brave and ditch the car altogether. Over-50s get discounts on public transport and if you really need a car for something, you could rent one with a scheme like Zipcar or Enterprise Car Club for cities outside of London
Using a price comparison website like MySupermarket can save you big money on your weekly food shop. In fact, MySupermarket says that they can help you save an average of £18 a week by comparing the contents of your basket to other leading supermarket stores.
Just pick your preferred supermarket from a choice of Tesco, Asda, Sainsbury’s and Ocado and start shopping. As you add items to your basket, the website will let you know how much you could save by switching to a different brand or product.
As your basket grows, My Supermarket also keeps a running total of how much you are spending, and how much it would be costing you at the three other supermarkets. So if a shop in Tesco were £10 cheaper than Sainsbury’s you could switch trolleys – genius!
These companies are paid to drive traffic to retailers’ websites. You can snag a share of that payment if you visit the online store you want by going via your cashback site first. For example, if you want to order your Marks and Spencer Christmas turkey online, log into your Topcashback site, search Marks and Spencer, and click the link. It’ll take you to the M&S website where you just shop as normal.
The cashback comes into your account a few weeks later. If you do this throughout the year for all of your online shopping activity, you can easily rack up a few hundred pounds of cashback without trying! You can pay out to your bank account or use the cashback to buy vouchers to spend online.
Become a mystery shopper
Get paid to eat, drink, shop, and go to the cinema (yes, really!).
All you have to do is sign up online and you will be sent details of where your next assignment will be.
It is your job to check that the standard of service is up to scratch, and write a short report about your experience.
Other ways to save or make money
We have loads more great ideas in our article on money-makers for over-60s, which are all relevant for over-50s too.
Also, our entire Make Money section is full of all kinds of different ways to make money on the side or even use your hobby or interest to give you a full-time earner. Start with our 10 easy ways to make quick cash article and move on to whatever takes your fancy!
We’re not especially keen on equity release for most people here at Moneymagpie. Although the industry is much cleaner than it was, it’s still not the safest path to tread. In many cases you get nowhere near the value of your property and if you have children it does mean that their inheritance will be drastically reduced.
However, if you have no children or you have no other means of supporting your retirement, then equity release could be something you might consider for later on. Seriously, though, don’t get into it until you are at least 65. Before that time, you should be using other means to create a nest egg for yourself. Equity release is a last resort (you get more for your home the later you leave it, anyway).
If you’re serious about releasing some of the value of your home, make sure that you use a company that belongs to the Equity Release Council, the industry regulatory body. Read up on it for as long as it takes for you to really understand what it involves and get independent advice before you jump in.