Mistakes over-60s are making include not claiming DWP benefits they are entitled to – like Pension Credit or the state pension. Others include drawing from a private pension while still paying in
A crucial alert has been issued for millions of UK households aged over-60. Those above 60 are being urged to “act now” to prevent missing out on vital funds as the Cost of Living crisis persists across the nation. Blunders that over-60s are committing include failing to claim Department for Work and Pensions (DWP) benefits they’re eligible for, such as Pension Credit or the state pension – if aged over 66.
Additional errors involve withdrawing from a private pension whilst continuing to contribute, which can activate the Money Purchase Annual Allowance (MPAA) and slash your tax-free pension contribution ceiling from £60,000 to merely £10,000 annually.
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Families are advised to steer clear of making flexible withdrawals (such as UFPLS or income drawdown) where possible, and urged to examine interest rates on their banking accounts, as many currently sit below one per cent interest.
Households can extract cash and transfer funds to an easy access savings account, with some offering up to 4.98 per cent. As an alternative, over-60s can deposit their money into fixed-rate ISAs and bonds providing up to 4.58 per cent, reports Birmingham Live.
Funderer’s chief analyst commented: “Many over-60s are unknowingly leaving money on the table. These aren’t complicated strategies – they’re simple steps that can have a big impact on financial security in retirement. Acting now can make your money last longer and give you peace of mind.”
Mark Hicks, head of savings at Hargreaves Lansdown, has stated: “Given that markets now expect two or three more rate cuts for the remainder of the year, savings rates are likely to continue trending downwards in the months to come, and fixed rate deals above 4.5% may not be around for much longer.
“For savers, this means keeping an eye on your savings rate, and being prepared to switch. You need to keep your emergency fund in easy-access savings, which are likely to drop.
“However, some banks will be in more of a hurry to cut rates than others, so you could more than double the rate from a pedestrian high street giant by shopping around among online banks and savings platforms.
“For money you don’t need for longer, this is a decent opportunity to consider fixed rate savings. Fixed rate deals, which guarantee the rate for a specific period – from a couple of months to five years – will let you lock in a rate for the duration.
“These have come down from the peak, but you can still make around 4.5%, and as easy access deals get less generous, these deals will look increasingly attractive.
“It means anyone who has money they don’t need for a fixed period of a few months or longer should consider tying it up for a better rate.”