Important information - the value of investments and the income from them, can go down as well as up, so you may get back less than you invest.

THERE’S a good reason why drivers get regular MOT checks on their car - by giving things a once-over and performing some running repairs, they’ll hopefully avoid breakdowns in the future. 

Likewise, when it comes to your finances, regular check-ups are necessary to ensure you’re not headed for disaster. That’s the thinking behind a new online government service - Mid-life MOT from Moneyhelper - which asks users numerous questions about your financial affairs before producing an ‘MOT’ report, with actions you can take to improve your money prospects. 

It’s a valuable tool, particularly for those with urgent needs to address like debt or insurance against health problems or even death. It’s a great starting point but should by no means be the end of your financial maintenance. If you already have the building blocks of your finances in place, what further checks can you carry put to keep your savings and investing plans roadworthy? 

Here’s how to perform you own mid-life MOT.  

When should you act? 

There’s no wrong time to run the rule over your finances, but the task becomes even more vital as you get closer to retirement. The government’s Mid-life MOT is aimed at those aged 45-64 - those with an eye on retirement but likely to still be working. If you fall in that bracket you should take the time to assess your finances. 

But don’t stop there - schedule once-a-year check ups to keep your plans on track.  

Do you have cash on hand? 

It’s always sensible to have funds for a rainy day. This is the money you think you need for real emergencies - perhaps a sudden loss of income when you need to take care of essential expenses.  

How much you need will depend on you but think about it in terms of your monthly outgoings. Holding savings worth three to six months of essential costs is often advised. 

Then there are savings that you may wish to dip into more readily, and then replenish afterwards. If you have holiday plans or other large expenses that don’t come along every month, but perhaps every year or so, build some savings for this too. Again, this is personal, but it could be equal to a month’s gross salary. 

If you have cash savings in place it will make investing easier, too. It means that you’re less likely to have to sell investments when you don’t want to in order to raise cash. 

What are your retirement targets? 

Do you know how much income you’ll need in retirement - and do you know how much you’ll need to save to achieve that? Only by answering those questions can you begin to take steps towards meeting your goals. 

Most people want to broadly maintain their standard of living once they retire. Thankfully, you may not need to recreate all of your in-work salary to do that because living costs tend to fall in retirement and because there’s some help from the taxman - you pay no National Insurance after State Pension age, for example. 

Use our MyPlan tool to estimate the total you may need to save in order to achieve the standard of living in retirement that you want. The image below shows an example of the results it produces.


MyPlan shows you the difference that saving more, retiring later and adding risk to your investments could have on your expected outcomes. You might not be on track to meet your goals but once you know that, you can act to push things in your favour  

Do you have a plan for what happens when you’re gone? 

No one likes to dwell on what would happen when they die but making provisions for it should be part of your financial planning. Drawing up a will means your assets will be distributed according to your wishes, while the job of administering your estate after death will be much easier for your loved ones. 

It’s worth considering whether you expect or want to pass money onto loved ones, and to consider the most tax efficient way to do it. Money saved inside a pension can be passed on without Inheritance Tax applying. Beneficiaries receive proceeds tax-fee if you die before age 75 and pay tax at their marginal rate of tax if you die after age-75. 

And don’t forget to leave instructions for how you’d like any benefits from your pension to be distributed. You can do this via an ‘Expression of Wish’ lodged with the administrator of your pension.  

Do you need more help? 

If your finances are more complex you might want to turn to a trained professional to help draw up your plan. That’s particularly the case if you are close to retirement and are unsure the best way to turn your savings into an income. Fidelity’s advisers can support you with solutions and personalised recommendations based on your personal circumstances.  Call us on 0800 368 6882

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Tax treatment depends on individual circumstances and all tax rules may change in the future. Withdrawals from a pension product will not be possible until you reach age 55 (57 from 2028). This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.

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