This podcast isn’t personal advice. If you’re not sure what’s right for you, seek advice. Tax rules can change and benefits depend on personal circumstances.
This episode also covers how to build financial resilience by reviewing the protections you have in place – looking at life insurance, income protection and critical illness cover.
Use the player icons above to listen on your favourite podcast app, or read the full transcript below.
This podcast isn’t personal advice. If you’re unsure what’s right for you, seek financial advice. Pension and tax rules can change, and benefits depend on personal circumstances. Investments can fall as well as rise in value, so you could get back less than you invest.
Full podcast episode transcript
[0:09] Sarah Coles: Hello and welcome to the Switch Your Money On podcast from Hargreaves Lansdown. I’m Sarah Coles – I’m Head of Personal Finance.
[0:14] Helen Morrissey: And I’m Helen Morrissey – Head of Retirement Analysis.
[0:17] Sarah Coles: And, today, we’re gonna dig deep and lift the lid on bits of your finances you might not be aware of.
So, I think, generally in life, we tend to live as if everything’s always gonna carry on as normal, but there can be things that are lying in wait to catch us out. So, this week, we’ll explore why you might be more vulnerable than you think – so that’s everything from changes like job losses and divorce to uncovering gaps in your finances for later life.
[0:42] Helen Morrissey: So, we should start with something that people will often take stock of at the start of every year, and that’s their job – and, for a lot of people, it is a pretty tough time at the moment, isn’t it?
[0:52] Sarah Coles: Yes, absolutely – I mean, you’re kinda looking at the Office for National Statistics data, and it’s been a long time since we had a lovely, happy jobs picture.
I think that the news headlines are actually really focused on the horrible changes to the entry-level market, but there’s actually a less-discussed phenomenon that’s going on at the same time – which is what’s been called ‘The Bonfire of the Managers.’
So, over the past year or so, businesses have started to ask whether they really need managers at all. If you can remember, Mark Zuckerberg – he famously complained about managers managing managers managing managers – but tech leaders... although they’ve led the way on shedding these layers, the trend is actually much broader than that.
[1:26] Helen Morrissey: And for managers who lose work, jobhunting has always been difficult when you are older. As people reach their late-40s and 50s, they may have caring responsibilities, for instance, for older or younger family members, so they’ll need a job that offers some flexibility. They may also pick up health conditions that will limit the roles that they’re able to do. The average healthy life expectancy is only around 62 years old, so there’s plenty of people facing challenges even in their 50s.
[1:57] Sarah Coles: It is tough – and, to make matters worse, the job market’s actually especially tough because there are so many people at this level looking for work – and, at the same time, so many companies cutting managers. There’s a risk these older, senior people are gonna spend longer than they expected out of the workforce – which, of course, can have really serious impact on their finances.
[2:16] Helen Morrissey: Absolutely – so what can people do?
[2:19] Sarah Coles: The strength of your financial safety net is absolutely vital.
So, we always say – as a rough rule of thumb – to be resilient, households need enough emergency savings to cover three-to-six months’ worth of essential spending. Now, that rises to one-to three-years’ worth in retirement. So, this money... actually, you need to be able to get your hands on it in a hurry – so it should be in a competitive, easy-access savings account.
It’s also worth addressing your level of borrowing – and the plus side is, if you’ve got a higher income, then actually it should be possible to do this by cutting back. So, the best way to do this is to draw up a budget for what you can cut if life takes a turn for the unexpected – and, doing this before anything goes array, is actually gonna help you keep a lid on your borrowing – and, of course, then you’ve got a plan ready to roll out if you lose work and you need to cut back significantly.
[3:01] Helen Morrissey: So, of course, it’s not just the job losses that mean people may not be able to work, is it?
[3:05] Sarah Coles: Yes – so, if you’re too ill to work, it can actually have a really profound impact – and I know you’ve been looking at some of the data on this.
[3:11] Helen Morrissey: Yeah – so we put together the HL Savings and Resilience Barometer with Oxford Economics, looking at people’s financial resilience across the board. This is from whether they’ve got enough savings to be resilient down to whether they’re on track with their pension savings. It breaks the data down by all sorts of things, including health.
Now, in September, we found that those in poor health are less than half as likely to have enough savings as those in good health, significantly less likely to be on track for an adequate pension income and have £185 less left at the end of a typical month. In fact, those in poor health, have just £4 left at the end of the month.
[3:51] Sarah Coles: And one of the really horrible things about this is, of course, once you develop a condition, it becomes much harder to protect your financial resilience. So, it actually makes sense to consider how you would cope financially if your health deteriorated.
So, we talked about having that emergency safety net of savings, but it’s also really worth looking at the protections that you’ve got in place – so that includes things like having life insurance. It’s not just looking at making sure you’re covering your debts but also looking at anyone who relies on you for your income and making sure that those people will have the money that they need if you were to pass away. And it’s also worth looking at what you would receive if you were too ill to work.
So, part of that picture will obviously be things like your sickness pay – but also, beyond that, ‘Do you get something called Income Protection through work, which provides some income for you if you’re unable to work through illness or an accident over a longer period of time?’ If you don’t have that through work, you can buy a standalone policy – so, ‘Do you actually need Income Protection yourself?’
Now, a separate sort of insurance is called Critical Illness Insurance. Now, that doesn’t pay you an income, but it will pay you a lump sum if you suffer from particular illnesses, or if you have an accident. So, it is worth looking at all those types of protection just to make sure you’ve got something in place if the worst was to happen.
[4:58] Helen Morrissey: So, it’s not just our ability to work that can catch us out in mid-life, is it? – because there is also the risk of divorce too – and you may well have already built up assets and the divorce means that you have portion them up. So, there is money to be lost there, and that can have a huge impact on your financial resilience – whether it comes down to your retirement resilience or your more day-to-day – but you can take steps to protect yourself, though, can’t you?
[5:24] Sarah Coles: Yes. I sound like a broken record here, but I think one of the big points here is that, regardless of the particular risk that you’re talking about – you know, whether you’re worried about losing your job – whether you’re worried about going through something like a divorce.... one of the most valuable things you can have is that emergency savings safety net – and also having that budget that can run when times are tight – because I think, when things are really stressful and difficult and changing, then it’s the worst possible time to revisit your finances and come up with a cunning plan. If you’ve got a cunning plan in place that you can roll out, it makes the world of difference.
And you also need, of course, to take care that the process, itself – very specifically – of divorce doesn’t take too much of a toll – and a really big part of that is your pension. Can you take us through some of the options people have?
[6:04] Helen Morrissey: Absolutely. So, divorce can have a catastrophic effect on our finances, and it could mean that people approach retirement with little in the way of retirement savings.
So, you know, people don’t realise that the pension can be included as part of the divorce settlement – they tend to be a lot more focused on things like the marital home, for instance – however, there are options.
So, one of the options is what’s known as ‘Pension offsetting’ – and this is where one person would keep the pension and they trade it against other joint assets, such as the family home – so one person keeps the pension, the other person keeps the family home.
Now, that’s a relatively straightforward way to secure a clean break from your partner – however, it does mean that one partner will need to work hard to rebuild their pension if they don’t have much in the way of their own pension savings.
The second option is what’s known as ‘Pension sharing’ – and that’s where the pension pot is, effectively, split into two separate pensions. Now, this has the advantage of being a clean break, and it leaves both partners with some degree of pension provision, but it can be complicated and it does require a Pension Sharing Order from the Court.
[7:15] Sarah Coles: So, there’s two – so there’s another third way, isn’t there?
[7:17] Helen Morrissey: There is – so this is what’s known as a pension Attachment Order – it’s called ‘Pensions earmarking’ in Scotland.
Now, this is where the person holding the pension pays an income or a lump sum to the other member of the couple when they start to take their pension. This enables the pension to be shared – so nobody needs to start from scratch – and it isn’t as complex as pension sharing – however, it does need to be ordered by a court and this does come at a cost.
It’s also not a clean break either because it’s, essentially, maintenance paid from the pension. All the taxes paid by the person taking the pension – even when part of the income is received by their ex – and the person who doesn’t have the pension has no control over when they would receive the benefits, so their ex could actually delay taking it.
So, what I would say is that the best solution, all round, is to build your own pension separately from your partner – try hard not to rely too much on your partner, even if their pension provision is great, because there is that chance that you might split up.
If you do build up your own pension separately and you stay together, then it means that you’ve got more as a couple – which is, obviously, great – but it also gives you that sense of independence – of having your own money to spend – which I think is really important. However, if you do split it, then at least you aren’t starting from scratch.
[8:45] Sarah Coles: Yeah – and I think it’s one of those things that different generations feel very differently about how they share money. Previous generations – where maybe one of the partners didn’t work for a big portion of their working life – then there’s a lot more familiarity with sharing income and all the rest of it. Whereas, I think, when two of you have worked throughout your working life – you’ve both had freedom and independence throughout your working life – it’s gotta be a huge adjustment, then, if you’re relying on one pension – so it kind of pays off whether or not you stay together, I guess.
[9:09] Helen Morrissey: Absolutely.
[9:10] Sarah Coles: But, of course, when you come out the other end of a divorce, it’s a real priority to rebuild, isn’t it? – so, of course, that includes pensions. So, if you had to give away part or all of your pension in divorce, there is a serious amount of work to be done. And, of course, again, divorce isn’t the only reason why people may realise, in mid-life, that they don’t have enough in their pension.
[9:29] Helen Morrissey: You’re right. So, I think pensions can be the source of many a mid-life financial crisis!
What tends to happen is... you know, we’ve got auto-enrolment – which is great in that it enrols you into a pension without you having to do anything – but it can mean that you don’t really engage with your pension ‘cause that element is done for you. It tends to be something that you’ll look at in the future, and then maybe risk not actually getting round to it at all. And this runs a risk of you getting quite close to retirement before you realise that you might not have enough to sustain the lifestyle that you were hoping for.
So, the HL Savings and Resilience Barometer shows that only 43% of households are on track for an adequate retirement income – and even higher earners are at real risk of under-saving – so it’s something that people need to be very careful of.
[10:19] Sarah Coles: So, I guess, when you’re reaching that mid-life stage, are there certain things people can do in order to make sure they’re not running the risk of this?
[10:25] Helen Morrissey: Absolutely – I think there’s several things that you can do to boost your retirement resilience. So, what I would say is... break it down, don’t make it this big, challenging idea that you might be concerned about engaging with. Break it down – take small steps, little and often, and they can make a huge difference.
So, what I would say, first and foremost, is make use of online tools, such as pension calculators – because, using a pension calculator every so often – put down how much you’ve got in your pension... it will tell you what you’re on track to get in retirement – and that’s a really quick way of saying, ‘Well, is this enough or is it not? – do I need to do more?’ – and I think that can be really good in that it can either make you aware of a pension gap – and it gives you time to fill it – or if can give you the confidence of knowing that you’re on track – which is great.
Now, if you do find that there is a bit of a gap between what you’ve got in your pension – or what you’re on track for and what you want in retirement – maybe have a think about, ‘Can you afford to boost your contributions?’
Now, you might not be able to do that immediately, but it could be as simple as making a bit of a New Year’s resolution to... every time you get a pay rise, for instance, that you increase your pension contribution alongside that – and that can be a great way of really boosting how much goes in.
I’d also say, if it’s possible, make sure that you’re making the most of your employer contribution because, with your workplace pension, your employer also contributes.
Now, many employers will contribute auto-enrolment minimums, but there are other employers out there who are willing to contribute more if you contribute more. So, that’s what’s known as an ‘Employer match’ – and, if your employer does offer that, it can be a great way of really boosting how much goes into your pension without necessarily putting in a lot more yourself – so it’s well worth checking out if that’s something that’s available to you.
What I’d also say is... another way of, potentially, really boosting your retirement resilience is check to see if you’ve lost track of a pension from a previous job. So, you know, we’ve all had several jobs during our careers. Now, you might find that you’ve got a pension from 10 years ago, for instance – that you haven’t updated your contact details, so you’ve lost track of that pension.
Now, that might only have been a very small pension – but, over time, that can grow – and, you know, it could be worth tens of thousands of pounds, and that could make a real impact on your retirement planning – so it’s well worth taking the time to see if you can track these things down.
So, if you think you’ve lost track of a pension, give the government’s pension tracing helpline a call. What you need to do is either give the name of your employer or the pension provider. Now, the helpline can’t tell you if you’ve got a pension with them, but they can give you the contact details, so you can get in contact with them and see if you do have a pension – and, if you have, that could make a huge impact on how much you’ve got.
[13:22] Sarah Coles: So, I guess, the regularly checking in could make a really big difference.
Of course, when we talk about pensions, we always have to say that money in a pension is not usually accessible until the age of 55 – and that’s actually rising to 57 from 2028.
And one of the other things I wanted to ask you, though, is... if people get to mid-life – and they realise that they’ve got a shortfall – is it too late? Is there a point at which you think there’s nothing you can do about this – you’re gonna have a really rubbish pension?
[13:45] Helen Morrissey: I am a real optimist – and I would always say that it’s never too late to make a difference. You can get tax relief on a pension – on your pension contributions – all the way up to the age of 75 – and, if you’re working, you’ll get the employer contribution too. So, taking steps to boost your contributions will help.
So, you can contribute up to your annual allowance every year. Now, this is whichever is the lowest of £60,000 or your annual earnings – whereas, if you are a very high earner, your annual allowance may be lower, so it’s well worth checking that.
You can also use unused allowances from the previous three tax years – ths is what’s known as ‘Carry forward.’
Another option that might be available to you is salary sacrifice. This enables you to contribute to your pension very tax-efficiently, as it lowers the amount of tax and National Insurance that you pay.
We are expecting restrictions on this to come in, but not until 2029 – so you can still make full use of salary sacrifice between now and then to boost your pension.
[14:49] Sarah Coles: So, it’s good to know that there are actually things you can do – ‘cause, otherwise, it does feel like a long list of things that can go wrong for people in mid-life.
So, sticking with the positives, I’ve put together a stat of the week that focuses on something a little bit more upbeat.
So, I’m gonna go back to job worries – but, don’t worry, not too deeply into it!
So, it’s fairly common that people will be worried that AI could take their job – but Microsoft has put together a list of all the jobs that have the least crossover with the things that AI can do.
So, assuming these jobs are safe on that basis, which of these three are safest?
Is it embalmers – is it massage therapists – or is it dishwashers?
[15:24] Helen Morrissey: Wow – that is quite a question, isn’t it?
[15:27] Sarah Coles: [Laughs]
[15:28] Helen Morrissey: Where do I start with that?! I’m gonna have to say, ‘Embalmers.’
[15:34] Sarah Coles: No – I’m so sorry – the answer is actually ‘Dishwashers.’
So, clearly, AI is gonna be completely fine with embalming. I don’t quite know how that’ll work – but, ...
[15:42] Helen Morrissey: Nor do I, Sarah – ...
[15:43] Sarah Coles: ...you never know!
[15:43] Helen Morrissey: ...nor do I! [Laughs]
[15:45] Sarah Coles: So, that’s all for this week – but, before we go, we should remind you this was recorded on January 6th 2026, and all information was correct at the time of recording.
[15:52] Helen Morrissey: Nothing in this podcast is personal advice – you should seek advice if you’re not sure what’s right for you.
[15:57] Sarah Coles: Pension and tax rules can change and benefits depend on circumstances. All investments fall as well as rise in value, so you could get back less than you invest.
[16:04] Helen Morrissey: So, all that’s left is for us to thank our Producer, Elizabeth Hotson.
[16:07] Sarah Coles: And to thank you very much for listening – we’ll be back again soon. Goodbye!
[16:10] Helen Morrissey: Goodbye!