Don’t let money fears haunt you: 3 common financial worries and how to overcome them

Halloween is rapidly approaching on 31 October. It’s the season to enjoy trick-or-treating with your children or grandchildren and laughing as you jump at scary films.

However, not all spooky experiences are fun. You might have a few financial monsters under the bed that keep you awake at night.

If so, you’re not alone. According to Yahoo Finance, 65% of UK adults spend an average of 22 hours worrying about money every week.

Unfortunately, ignoring your concerns won’t make them go away, and over time, they could harm your bank balance and your wellbeing.

Keep reading to learn how to overcome three common financial worries and take control of your wealth.

1. “I’ll run out of money in retirement”

Research findings published by Pensions Age reveal that 63% of UK adults worry about running out of money in retirement.

Indeed, rising living costs and longer life expectancies could mean you need more in your retirement pot than previous generations to fund the lifestyle you want.

Imagine you retire at 55 and live to 85. You’d need enough money to provide an income for 30 years. Remember, too, that over time, your outgoings could increase. For example, as you get older, you might need to pay for healthcare or support with everyday living. Equally, the cost of essentials such as energy and food may rise over time in line with inflation.

How to overcome your fear

Replace your uncertainty with a clear financial plan for retirement. You might find it helpful to:

• Consider what you want your retirement to look like – What are your goals, and what kind of lifestyle do you want?
• Calculate the income you’ll need – You’ll need to cover essential costs, an emergency fund, later-life care, and spending money for hobbies, holidays, and so on. Remember to factor in your life expectancy; the Office for National Statistics (ONS) has a life expectancy calculator you might find useful as a jumping-off point.
• Check your current retirement savings and investments – Assess whether your retirement savings are on track by reviewing your State Pension, workplace or private pensions, savings, and investments.
• Seek financial advice – A financial planner can use cashflow modelling to show whether your assets are likely to support the retirement you want. They can also model different scenarios, such as retiring earlier or living longer.

2. “Tax will erode the wealth I’ve worked so hard for”

When you’ve spent years building wealth for the future – retirement, leaving a legacy to loved ones, and so on – the thought of losing a chunk of this to tax may feel demoralising and worrying.

According to Money Age, 63% of adults in the UK are worried about possible tax rises in the government’s Autumn Budget on 28 October.

How to overcome your fear

While you can’t avoid tax altogether, understanding the rules and planning your finances carefully could allow you to keep your wealth as tax-efficient as possible.

• Review your position every tax year – Your tax liability might change from year to year as your financial circumstances evolve and tax legislation changes. Understanding how much you’re likely to pay in tax could help you make informed decisions about how to manage your money efficiently.
• Make the most of tax-efficient wrappers – There are two main types: ISAs and pensions. These shield your savings and investments from tax, within prescribed limits.
• Use available allowances and exemptions – Allowances let you earn a specific amount of income or profit in a tax year before you start paying tax. Exemptions make certain types of income, assets, or financial transactions immune from tax. A financial planner can explain which allowances and exemptions you’re entitled to and how to make the most of them.
• Seek financial advice – Tax rules can be difficult to navigate, and they can change. Seeking financial advice could help you identify valuable opportunities to protect your wealth from tax.

3. “If something happens to me, my family might struggle”

If other people depend on you financially, such as children and elderly parents, you might worry about how they would cope if you’re no longer able to provide for them.

This situation could arise if you pass away or face unexpected events such as serious illness, redundancy, divorce, or bereavement.

How to overcome your fear

• Review your protection needs – Think about the level and type of financial support your loved ones would need if something happened to you. This might include life insurance, income protection, critical illness cover, and so on. Make sure any new or existing cover aligns with your goals.
• Identify other sources of financial support – In addition to any protection you take out, your dependants may be able to access support from your employer or the government.
• Create, update, and organise key documents – Make sure your will, pension beneficiary nominations, Powers of Attorney, and all other important financial information reflect your current circumstances and wishes. Then, let your family know where to find these documents.

Financial fears are natural, particularly if your decisions affect the people and goals that matter most to you. The good news is that putting a plan in place and reviewing it regularly could help you face these concerns and feel more confident about the future.

Get in touch

If your money worries are keeping you up at night, we can create a plan that gives you confidence in your financial future.

To find out more, please get in touch by email at helpme@aspirellp.co.uk or call 0117 9303510.

Please note

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate cashflow planning or tax planning.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.

Workplace pensions are regulated by The Pensions Regulator.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

Note that life insurance and financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.

Cover is subject to terms and conditions and may have exclusions. Definitions of illnesses vary from product provider and will be explained within the policy documentation.