It pays to be prepared - or at least means you'll be a little more in control of your money. Vicky Shaw reports on this year's financial forecast.
As with any year, 2019 is bound to bring some unexpected surprises. But, looking ahead, there are some money moments you may be able to prepare for – even if some are more certain than others.
“Uncertainty and change are a part of life, and we’ll be better placed to ride these waves if we’re prepared for whatever may come next,” says Alistair McQueen, head of savings and retirement at Aviva. “We will all benefit from a couple of hours to prepare our finances for whatever 2019 may bring.”
So what can you do to help get prepared? Here, McQueen highlights some of the key 2019 money moments to get ready for…
1. Get ready for the rising state pension age
In 2018, the state pension age for men and women was equalised, at 65. Men and women will now experience a state pension age rising in tandem. The state pension continues to represent most peoples’ biggest source of income in retirement. So, in 2019, it could be a good idea to request a free state pension forecast from the government to understand when you will be entitled to yours, and how much you may receive (gov.uk/check-state-pension).
2. Get ready for a longer working life
Last year saw the number of people in work over the age of 50 reach a record 10 million. As our life expectancy rises, we can expect this trend to continue. Aviva expects one in three workers in the UK will be over the age of 50 in the next decade. So, looking ahead, it may be worth starting to re-frame your expectations towards a longer working life. Aviva is launching a new service called the ‘mid-life-MOT’, to help our people prepare for this longer working life.
3. Get ready for an increase in pension payments
Employers have duties to provide a workplace pension. Since 2012, this new system – called automatic enrolment – has introduced nearly 10 million new savers across the UK to pensions. It’s been a great success. In April 2019, the minimum pension payment will increase from 5% of your earnings to 8% of your earnings. At least 3% of this 8% must come from your employer. A workplace pension can be a valuable way of saving for later life. So, in 2019 think about preparing for this increase in payments. For your future, it will pay to save.
4. Get ready for potential further interest rate increases
After a near decade of record low interest rates, 2018 saw the Bank of England increase its base rate to 0.75%. Many commentators expect 2019 could see further small increases in the base rate, in a bid to ease rising price pressures. This would be good news for savers, but not so good for the millions of borrowers holding short-term loans and mortgages. So, in 2019, it would be a good idea to shop around for the best saving and borrowing rates. A small change could make a big difference.
5. Get ready for more people taking up pension freedoms
The new pension freedoms for over-55s have proven to be hugely popular. More than £20 billion has been withdrawn from private pensions in new flexible payments. If you’re over 50 and considering your options, it would be a good idea to consult the government’s free Pension Wise service for guidance (pensionwise.gov.uk).
6. Get ready for more ways to manage your money online
Many of us regularly go online to send emails, do a spot of shopping or catch up on social media. But using the internet to manage pensions and investments continues to be an afterthought for many. Most pension and investment providers now offer free online services to help you manage your money. So, in 2019, consider taking advantage of these services so you can make the most of your money, whenever and wherever you want.
7. Get ready for the new face of the Bank of England £50 note
The new face on this new note will be announced in summer 2019 – and the Bank has stated that it will be someone who has contributed to science.
8. Get ready for the long game
2019 looks set to be a time of volatility and change. At times like these, it is helpful to remember that investments are typically designed to navigate at least a five-year horizon, or even up to 40 years if it’s our investment in our retirement. So, in 2019 it would be a good idea to remember those longer-term goals.