Your pension becomes unlocked
At the age of 55 you are able to access your pension fund and draw on it almost like a bank account, thanks to the pension freedoms introduced back in 2015.
While it means having greater control over your money, it’s important to make the right decisions about how to use it - and not rush to withdraw it.
Experts are unanimous that rushing to draw on money too soon could mean running out of cash. A worrying study in 2017 revealed that record numbers of people (42%) had been forced to step back from work earlier than planned. It is feared this group were most likely to take cash in the early years of retirement, and then risk finding themselves short. The financial consequences are likely to be magnified as people year on year wait longer to claim the state pension.
Those choosing not to buy an annuity will need to generate a significant investment return to see them through retirement, which is now stretching beyond 20 years for the majority of people.
Taking professional advice on how to make your money last as long as you need it to is crucial. You may want to consider using a mixture of an annuity, income drawdown and cash withdrawals.
You are now able to use equity release
Equity release is a loan taken against the value of your home for those aged over 55. You are still able to live in and own your house. Like a mortgage, interest is charged on the amount borrowed. However, unlike a mortgage, interest is typically not repaid, but rather rolls up and is paid off when the borrower dies or goes into care. There is also a home reversion scheme where the provider will own some, or all of your home.
There is a drawdown version, designed for those who don't need a large cash lump sum at the outset. Instead, a pot of money is earmarked for you to draw on, as and when you need it. You only pay interest on the cash you release, which could save you money and allow more to be left as part of your estate.
Five equity release pitfalls to avoid
But equity release isn’t right for everyone. It’s important to seek guidance and to explore alternatives. If you decide to go ahead with an equity release plan, choose carefully as there are different types, some with complex charging structures. Some have a lower interest rate but they may have other charges.
More top savings for the over 55s
Don’t forget to look out for new discounts available to you at age 55.
Discounts for over 55s at Odeon cinemas
Going to the cinema these days can be a costly business. But that’s not always the case. If you're over 55, you can take advantage of Odeon Silver Cinema deals, with tickets available on selected films and screening times from as little as £3 for standard seats - with tea, coffee and biscuits included. Go to odeon.co.uk/silvercinema/ to find out more.
Saga’s very own Possibilities free membership scheme offers a veritable smorgasbord of mouth-watering, money-saving dining deals at many of your favourite restaurants, including Cafe Rouge, Cote Brasserie, Prezzo, Toby Carvery, Harvester, Carluccio's and many others.
From homely inns to buzzy brasseries, Dining Possibilities is the best place online for great discounts and extra treats at more than 1,800 participating restaurants nationwide.
Websites such as vouchercodes.co.uk also offer tons of short-term discounts on well-known high street chain restaurants, including two-for-one deals and often up to a third off the price of a meal.
Holiday, travel and hotel discounts
As you can see, among the many perks for older people is the wide range of excellent everyday discounts available. But couldn’t let you go off and start enjoying your discounts without sharing some more absolute crackers with you. We’re nice like that. Here are a few more to whet your appetite and whip up your wanderlust:
Exclusive savings on holidays and hotel stays for Possibilities members – Saga’s free membership programme
Save up to 15% on all your airport extras
Train travel in Wales - Arriva Club 55
If you live in or visit Wales and are aged over 55 you can travel throughout the country by train at discounted rates with an Arriva Club 55 card. The discounts only apply for off-peak travel but there is no need to book in advance. Senior Railcard holders get a further discount of £1. Visit: arrivatrainswales.co.uk/club55
And you can even ask for supermarket discounts...
If you don't ask for a discount at the supermarket, then you could be needlessly missing out on some big savings. Some in-store discounts aren't advertised - so make sure you speak up to save yourself some money.
Choosing the time that you shop can make all the difference, too. And that's not just for reduced items on the brink of their sell-by date. Later in the day it's always worth asking for a discount on fresh produce at the meat, fish and deli counters of your supermarket.
It doesn't always work - but you just might be in luck. And that goes for shoppers of all ages.