The Best And Worst States For Retirement: All 50 States, Ranked

Omaha, Nebraska (Joe Willman / EyeEm)

Retirement means no longer having to sweat over how to tackle your company’s latest project, what you need to land your next promotion or who microwaved fish in the office breakroom.

But the end of your career brings new questions including where to spend your days now that you no longer punch the clock.

Should you settle by a bright beach and humming population hub? Or maybe in a place where residents wave to each other and green grass grows?

Perhaps a place near the center of it all: Nebraska.

The Cornhusker State is the best state to retire, according to a new Bankrate study, followed by Iowa, Missouri, South Dakota and Florida. Maryland, on the other hand, comes in the last place in our ranking. New York and Alaska also might be better for retirees to visit than reside, according to the study.

For this study, Bankrate looked at affordability, weather and a number of other factors important to retirees. We also created an interactive tool that allows you to see how the results change based on your preferences in retirement.

Ranking of best and worst states for retirement State Overall rank Affordability Crime Culture Weather Wellness Nebraska 1 14 19 21 30 8 Iowa 2 8 15 20 34 12 Missouri 3 1 42 33 19 27 South Dakota 4 17 23 12 39 10 Florida 5 25 29 13 2 31 Kentucky 6 9 9 46 15 24 Kansas 7 7 39 37 20 21 North Carolina 7 13 28 28 12 33 Montana 9 16 31 2 45 20 Hawaii 10 45 24 9 1 9 Arkansas 11 4 46 39 9 34 Wisconsin 12 20 15 17 43 7 North Dakota 13 22 17 26 49 2 Vermont 14 42 1 3 44 1 New Hampshire 15 39 1 4 41 3 Alabama 16 10 44 44 7 31 Texas 17 24 37 50 4 13 Idaho 18 15 4 30 42 15 Mississippi 19 6 24 49 6 40 Wyoming 20 23 9 13 46 11 Oklahoma 21 11 41 43 11 35 Tennessee 22 12 46 34 14 35 Massachusetts 23 43 11 9 33 4 Michigan 24 1 22 35 40 43 West Virginia 25 18 18 27 24 39 Ohio 26 5 19 29 26 47 Rhode Island 27 44 8 5 28 16 Georgia 28 19 35 45 5 44 Indiana 29 3 27 41 25 46 Connecticut 30 46 7 8 29 5 Maine 31 35 3 1 48 18 Delaware 32 30 36 9 16 41 Colorado 33 36 32 22 37 6 Pennsylvania 34 28 13 15 31 28 Utah 35 21 21 47 32 17 Louisiana 36 29 48 48 3 25 New Mexico 37 26 49 38 21 22 Arizona 38 33 43 39 10 29 Virginia 39 32 6 36 17 42 Minnesota 40 31 14 31 47 14 South Carolina 41 27 45 22 8 50 New Jersey 42 48 5 16 22 23 California 43 49 34 17 13 19 Oregon 44 37 30 6 35 45 Nevada 45 34 40 17 27 48 Washington 46 41 37 25 36 37 Illinois 47 40 26 32 23 49 Alaska 48 38 49 24 50 26 New York 49 50 11 7 38 30 Maryland 50 47 33 42 18 37

The best state for retirement

Why should retirees pull the moving van off Interstate 80 and unpack in Nebraska?

The state has an average annual temperature of 49 degrees. So while the heartland can count on experiencing all four seasons, it’s no Hawaii, which had an average annual temperature closer to 80 degrees, according to the National Oceanic and Atmospheric Administration data Bankrate analyzed.

Nebraska lagged behind on weather compared with other states, but it fared well on the other measures in the ranking: affordability, crime, culture and wellness.

Wellness was especially a bright spot with Nebraska ranking No. 8 out of 50 states. Dialing in on health care specifically, Nebraska had 61 percent of the health measures that achieved the benchmark or better, according to the National Healthcare Quality and Disparities Reports. That’s a higher percentage than about two-thirds of the other states, the data show.

Wellness and affordability carried the most weight in Bankrate’s ranking. Nebraska ranked within the top 15 states for the cost category.

Nebraska is not for everyone, as the state recently boasted in an ad campaign. But Nebraskans can camp near Chimney Rock State Park, shop and dine near the Heartland of America Park and Fountain in Omaha or snap pics of the floral designs in Lincoln’s Sunken Gardens. And of course, those who want to hit the road in retirement have a nice central point to visit national parks in the West, head north to Mount Rushmore National Park or east on I-80 into the Midwest.

The best of the rest

• Iowa: In addition to teasing Iowa about having better corn, Nebraska can brag about beating The Hawkeye Eye state for livability for retirees. Iowa came in second in Bankrate’s ranking. The state ranked better for affordability (No. 8) and scored within the top 20 states for culture but was outperformed in other measures.
• Missouri: Third-place Missouri is more affordable and has a relatively moderate climate compared with other states. Unfortunately, sunshine and saving only go so far in The Show-Me State. Other states ranked higher for culture, wellness and especially safety.
• South Dakota: Fourth-place South Dakota ranks better than most states on every measure except weather. The state had an average annual temperature of almost 46 degrees, according to Bankrate’s study. The state performed surprisingly well on culture, ranking 12th, partly due to having the second-highest number of arts, entertainment and recreation businesses per capita.
• Florida: The Sunshine State has long been a haven for retirees. If you like a warm climate, Florida has the second-best right behind Hawaii. The state scores well on culture (No. 13). If you’re looking for retirement-age friends to play pickleball, you’ll have the best chance of finding them in this state where 19 percent of the population is 65 and older. That’s the largest share of 65+ folks of any state, the data show.

What matters in retirement

“Where to live is probably one of the most personal decisions one can make because it’s not just about preferences, it’s also about the financial considerations that are associated with it,” says Mark Hamrick, senior economic analyst at Bankrate.

It’s not uncommon for retirees to get a new address after they step away from work. Almost 570,000 adults 65 and older moved to a new state or the District of Columbia during the past year, according to the most recent data from the U.S. Census Bureau.

Almost 4 in 10 retirees (38 percent) say they’ve moved at least once since leaving work, reported a 2018 survey by the Transamerica Center for Retirement Studies.

When choosing where to live in retirement, retirees most value proximity to family and friends, affordable cost of living, access to excellent health care and hospitals, good weather and a low crime rate, the survey results found.

“Obviously, a primary area of concern for older Americans is health care costs,” Hamrick says. “The older we get, the more likely it is we’re going to have an increasing need for health care services. In some cases, there will be illness and, in some cases, there will catastrophic illness. That can be very expensive.”

A typical couple who retire this year at age 65 is estimated to need $285,000 in today’s dollars for medical expenses in retirement, according to Fidelity Investments. That hefty price tag doesn’t include what may be needed for long-term care.

Rising health care costs are proving to be an issue as Americans find fewer tools available in their retirement planning toolboxes. As pensions have disappeared, individuals have had to take more responsibility for funding their own retirements, Hamrick says.

“We urge Americans as early as possible in their working lives to plan for retirement by taking advantage of a 401(k) through an employer and trying to fund the retirement as aggressively as one can possibly afford,” he says. “The older one gets the more obvious it becomes how well they have been planning for retirement, and, unfortunately, if many Americans haven’t sufficiently saved for retirement then they have to seek at least part-time work in their senior years.”

Methodology

To construct our ranking, Bankrate looked at eleven public and private datasets related to the life of a retiree. The study examined five categories (weightings in parentheses): affordability (40%), crime (5%), culture (15%), weather (15%) and wellness (25%).

Affordability was calculated using scores from the 2019 Cost of Living Index from the Council for Community and Economic Research, the percentages of people who needed to see a doctor but could not because of cost in the past 12 months from the Agency for Healthcare Research and Quality and rankings for income, property and sales tax rates from the Tax Foundation’s 2019 State Business Tax Climate Index.

Crime was calculated using the property and violent crime rates per 100,000 inhabitants for each state from the FBI’s 2017 Crime in the United States report.

Culture was calculated using the number of arts, entertainment and recreation establishments per capita, restaurants per capita and adults 65 and older per capita from the U.S. Census Bureau.

Weather was calculated using the average daily temperature from 1985 through 2018 from the National Oceanic and Atmospheric Administration. Hawaii’s temperature was calculated using the available data from the Honolulu weather station.

Wellness was calculated using the rankings from the Gallup-ShareCare Wellbeing Index, the number of places providing services for the elderly and people with disabilities per capita from the U.S. Census Bureau and the number of health care benchmarks states achieved or exceeded in the National Healthcare Quality and Disparities Reports provided by the Agency for Healthcare Research and Quality. For this study, Bankrate only looked at the benchmarks that included data for all 50 states.

6 reasons to refinance when rates are rising

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Rising rates tend to discourage homeowners from refinancing, but there are good reasons to refinance even when rates are going up, and even if refinancing means paying a higher rate than you currently have.

“The direction of interest rates shouldn’t impact your decision. Instead, you should refinance when it makes sense to you and based on how long you expect to hold on to the mortgage and property,” says Brian Koss, executive vice president at Mortgage Network in Danvers, Massachusetts.

With that in mind, here are six scenarios for refinancing while rates are rising.

1. Lower your rate and payment

If you don’t already have a super-low rate, you might still be able to get a rate that’s lower than your current one.

“Rates in the 4 percent to 5 percent range are still very attractive,” says Chuck Price, vice president of lending at NEFCU, a federal credit union on New York’s Long Island.

You also should consider the costs. If your new mortgage had costs of, say, $5,000, and monthly interest savings of, say, $200, your payback period would be 25 months.

“If you planned to sell in 10 years, this would make sense, as opposed to if you planned to sell in two years,” Price says.

The risk is chasing a lower rate while extending your term, which could mean paying more due to the longer repayment period, says Kevin W. Hardin, a lending officer with Bank of America.

2. Lock in a fixed rate and payment

All mortgages come with an initial rate that’s either fixed or adjustable. A fixed rate never changes. An adjustable, or variable, rate can change over time. Adjustables, known as hybrids, have a rate that adjusts only after three, five, seven or 10 years.

Adjustable-rate mortgages, or ARMs, have monthly payments that can move up and down as interest rates fluctuate. Most have an initial fixed-rate period during which the borrower’s rate doesn’t change, followed by a longer period during which the rate changes at preset intervals.

An adjustable rate exposes you to the risk of a higher payment. The closer you are to an adjustment and the longer you plan to keep your home, the riskier the adjustable-rate mortgage is. If you refinance into a fixed rate, the risk goes away.

3. Stop paying mortgage insurance

Private mortgage insurance, or PMI, protects your lender if you don’t pay back your loan.

You’ll usually have to pay for PMI if you make a down payment that’s less than 20 percent of your home’s purchase price when you buy or your equity is less than 20 percent of your home’s current value when you refinance. (VA loans guaranteed by the U.S. Department of Veterans Affairs don’t require PMI.)

Some loans allow you to stop paying for PMI once your equity reaches a certain percentage of your home’s value, either because you’ve paid down your loan or because your home’s value has increased. Other loans require PMI for the loan’s entire term unless you sell or refinance.

Refinancing from a loan with PMI to a loan without PMI might make sense even if your rate is higher because you won’t have to pay the monthly mortgage insurance premium, sometimes abbreviated as MIP.

4. Remove a borrower

Whoever is a named the borrower on a loan is responsible for making the payments. That’s true even if you and your spouse get divorced and your divorce decree assigns responsibility for a loan you and your wife got jointly to you or her solely.

Your lender has no obligation to remove you or your former spouse from your loan, regardless of your divorce agreement. If you’re the one who’s solely responsible, your agreement might require you to refinance to remove your former spouse, even if rates are rising.

If you have a home equity conversion mortgage, or HECM, often called a reverse mortgage, and your spouse was too young to qualify or you got married after you got your HECM, you might want to refinance to add your spouse.

Otherwise, your non-borrower spouse might not be allowed to remain in your home if you die or move out, or for health reasons.

5. Get cash to spend

Another potential reason to refinance your home is to extract cash from equity. The cash can be used for any purpose, such as remodeling or making repairs to your home, starting or expanding your own business, paying off other debt or paying medical, legal or education expenses.

Expensive needs and wants exist regardless of rates, which suggests homeowners might want to refinance to take cash out even if their rates are rising.

Whether cashing out makes sense depends on your perceptions of the benefits and risks.

“All good reasons to refinance can become bad if done at the wrong time,” Hardin says.

Another option might be to get a home equity loan or line of credit instead of a new first mortgage. The rate for your second loan might be higher, but the principal will be less and the term shorter.

6. Get cash to invest

Rising home values create opportunities to refinance and extract cash to invest in other assets.

This strategy could make sense if you can pay your new mortgage without counting on your investment gains, take advantage of the income tax benefits, afford to lose the money you invest, have excellent credit and plan to keep your home a long time, says Mike Windle, financial adviser at C. Curtis Financial, an investment advisory firm in Plymouth, Michigan.

That’s a lot of ifs, and there are multiple risks as well. Your investment returns might not exceed your interest expense. You might lose a significant chunk of your principal. Or your house could decline in value and you might not be able to sell it for enough to pay off your loan.

When It's A Good Idea To Refinance Your Mortgage

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Homeowners who are considering refinancing their mortgages have one advantage to count on – interest rates remain low.

Refinancing from a 30-year or adjustable rate mortgage (ARM) to a lower rate can help consumers save money each month and cut the total amount that goes towards interest payments.

Here’s how to determine whether you will benefit by refinancing your mortgage. 

Here are the two major types of refinances:

1. Rate-and-term refinancing to save money. The majority of homeowners refinance the rest of the balance on their mortgage for a lower interest rate and an affordable loan term. (The loan term is the number of years it will take to repay the loan such as 15 or 30 years.)

2. Cash-out refinancing where you obtain a new mortgage for more than what you owe. The difference is often used to pay for renovations or to retire credit card debt.

Other reasons consumers refinance include to replace an adjustable-rate mortgage with a fixed-rate loan, eliminate FHA mortgage insurance or to settle a divorce.

Some consumers refinance to lower their monthly payment and have more money each month for bills, groceries or an auto loan.

“If a borrower is refinancing strictly to lower monthly mortgage payments and closing costs are $2,400, the borrower should expect to save at least this amount in interest payments for the duration they plan to have the loan,” says Richard Liu, a mortgage consultant for C2 Financial Corp., a San Diego-based mortgage brokerage.

Check today’s low rates on a mortgage refinance.

Determine how long it will take to break even

Mortgage closing costs add up to thousands of dollars. To decide whether a refinance makes sense, calculate the break-even point, which is the time it will take for the cost of the mortgage refinance to pay for itself.

“If you can shave one-half to three-quarters of a percentage point off your mortgage loan by refinancing, you should look into it,” says Greg McBride, CFA, chief financial analyst for Bankrate. “Just be sure the cumulative savings on monthly payments is enough to offset the costs of refinancing. If you’re planning on moving in the next year or two, it might not.”

Break-even point example

Break-even point = Total closing costs ÷ monthly savings

Example:

30 months to break even = $3,000 in closing costs ÷ $100 a month in savings

If you plan to keep the house for less than the break-even time, you probably should stay in your current mortgage.

Mind the term in rate-and-term

The formula above doesn’t measure your total savings over the life of the new mortgage. A refinance can cost more money in the long run if you start your new loan with a 30-year term.

Example:

Kris has been paying $998 a month for 10 years. If Kris doesn’t refinance, the payments will total $239,520 over the next 20 years.

With a refinance, Kris could pay $697 a month to repay the new loan in 30 years, or $885 a month to pay it off in 20 years.

$697 x 360 months = $250,920

$885 x 240 months = $212,400

In the example above, Kris borrowed $186,000 at 5 percent. 10 years later, Kris had a remaining balance of $146,000, and refinanced at 4 percent.

Use Bankrate’s mortgage calculator to compare your own loan scenarios:

• See what happens when you input different mortgage terms (in years or months).
• Reveal the amortization schedule to see how much total interest you would pay.

Good credit can save you lots of money on your mortgage. Check your credit score for free at myBankrate.

Pros and cons of cash-out refinances

Cash-out refinances often are used to pay down debt. They have pros and cons.

Imagine that you use a cash-out refinance to pay off credit card debt. On the pro side, you’re reducing the interest rate on the credit card debt. On the con side, you may pay thousands more in interest because you’re taking up to 30 years to pay off the balance you transferred from your credit cards to your mortgage.

But the biggest risk in this scenario is in converting an unsecured debt into a secured debt. Miss your credit card payments, and you get nasty calls from debt collectors and a lower credit score.

Miss mortgage payments, and you can lose your home to foreclosure. Home equity debt that’s added to the refinanced mortgage always was secured debt.

How to create a passive income stream

If you’re worried your salary is not enough to help you save a deposit for your first property or prepare you for retirement, building wealth through passive income is a strategy that might appeal to you.

What is passive income?

Passive income is a source of revenue that continues even after the work is complete, for example, royalties from a book or film.

We’re not suggesting you go out and write a book (not very passive) or make a blockbuster movie (not very savvy), but some of the below options do require a little effort in the beginning to then pay you in the long-term without you needing to lift another finger.

What we’ve tried to highlight here is how to make your money (that you’ve already earned) make more money (without you having to do much), so they do rely on you having some initial capital already behind you.

Some of these strategies involve an element of risk. If you are not fully comfortable with that, it might be more advisable to go down the slightly more labour intensive route of selling your stuff on eBay, setting up a side business or writing that bestseller after all.

What ways can I earn a passive income?

Here are eight strategies for creating a passive income stream:

1. 1. Switch your bank account
   2. Earn interest on savings
   3. Use a cashback or rewards credit card
   4. Buy via cashback websites
   5. Try out robo-investing
   6. Rent out a room (or parking space)
   7. Invest with peer-to-peer lending
   8. Purchase dividend-yielding stocks

1. Switch your bank account

Loyalty to your bank is a thing of the past, and banks know it. That’s why so many offer cash switching incentives (the current highest is £200 from HSBC) for current accounts, many of which link with savings accounts, some with interest as high as 5%.

Not all banks are part of the switching scheme, but those that are guarantee all direct debits and standing orders are transferred to your new account within seven days.

If they fail to do this and you wind up with a late payment charge from your old account, your new bank should cover it.

Most bank accounts have a minimum pay-in and a two direct debits requirement – make sure you meet them to reap the full benefits of the switching rewards.

Some charge a monthly fee, so watch out for that when you switch over as you do not want to pay out more than you earn.

2. Earn interest on savings

In today’s low interest climate, the best rates on savings are often reserved for fixed-rate accounts or bonds. These are savings accounts that lock away your money for a set period of time. Generally speaking, the longer it’s locked away, the higher the rate.

Only use these if you are comfortable with not having access to your money. If you suddenly realise you need it before the bond is up, you will most likely have to pay an early withdrawal fee.

One way to avoid this is to get a current account with a high interest rate as we mentioned above.

Today, the best returns on savings are from Lifetime and Help to Buy ISAs where the government pays you a 25% bonus on your funds. The Help to Buy ISA pays this on withdrawal, whereas the Lifetime ISA pays in the bonus annually.

3. Use a cashback or rewards credit card

If you are going to spend on a credit card anyway (which you may need to do to build up your credit history), you might as well get one that gives you cash bonuses to do so.

There are a few cards out there that offer cashback or that operate reward schemes that could give you discounts in certain stores or earn you air miles.

However, always approach credit cards with caution – they are a debt product after all. If you do not think you will be able to pay it back in full every month, your interest repayments will very quickly outpace any cashback or rewards.

4. Buy via cashback websites

Cashback websites are essentially third party portals that you visit before clicking through to a website from which you were already going to buy something.

Using the cashback site’s link rewards them with money, some of which they pass on to you. How much you could get is usually shown as a percentage of the total amount you spend, but you are not always guaranteed to get that amount.

Like with a cashback credit card, only use a cashback site if you were planning to spend that money anyway – that way, you really could be getting something for nothing.

5. Try out robo-investing

Robo-investing is one of the slightly riskier ways to make a passive income, especially as you cannot specify where your funds get invested.

Unlike with traditional savings accounts where your money just sits there earning (or not earning much) interest, here it gets invested so you could reap bigger financial rewards. Remember, you could also experience a loss, so proceed with caution.

Robo-investing, open banking apps like Moneybox round up your spending and invest the difference.

For example, if you bought something costing £2.80, Moneybox rounds it up to £3 and invests the spare 20p. You can pick from three levels of risk: cautious, balanced, or adventurous.

The idea is, the amounts are so nominal you do not notice them not being there – it’s like putting your spare change in a piggy bank rather than having it jangle around in your pocket.

However, if you are someone who likes to keep an eye on every penny, this may not be the best way for you to earn a passive income.

6. Rent out a room (or parking space)

Buying and then renting out an entire property is a good way to earn a passive income, but it’s an expensive one and requires a lot of work.

For starters, you’ll have to pay an extra 3% in stamp duty (if it’s your second home, otherwise you pay the normal stamp duty rates), need a 25% deposit and – if you’ve already exceeded the tax-free income threshold (£12,500 in 2019/2020) – you’ll have to pay income tax on any earnings.

However, if you have a spare room in your current property or have an empty parking space in an area where parking is an absolute premium, you can rent it out.

Again, this is something you will need to report to the tax man, but if you are not using the space, it could be a great way to earn passive income.

7. Invest with peer-to-peer lending

Peer-to-peer (P2P) lending consists of a personal loan made between you and a borrower, facilitated through a third-party intermediary such as Zopa or Funding Circle.

As a lender, you earn income via interest payments made on the loans. But because the loan is unsecured, you face the risk of the borrower defaulting on payments.

To minimise that risk, you should do two things:

• Diversify your lending portfolio by investing smaller amounts over multiple loans
• Analyse the historical data on the borrowers to make informed picks

It takes time to master the metrics of P2P lending, so it’s not entirely passive and because you’re investing in multiple loans, you’ll need to pay close attention to payments received.

Whatever you make in interest should be reinvested if you want to build income.

8. Purchase dividend-yielding stocks

A dividend is a sum of money paid to shareholders out of a company’s profits. Shareholders in companies with dividend-yielding stocks receive payments at regular intervals from the company.

Since the income from the stocks is not related to any activity other than the initial financial investment, owning dividend-yielding stocks can be one of the most passive forms of making money.

The tricky part is choosing the right stocks. To try and minimise loss, thoroughly investigate the company you’re thinking of investing in. Do not rush into anything!

If you are unsure of what to do, it might be worth speaking to a financial advisor. They will explain the risks meaning you can make an informed decision about the best course of action.

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Last updated: 18 April, 2019

What happens to bank accounts after death?

Dealing with the death of a loved one is always going to be hard. Here we explain what happens to their bank accounts and what steps you need to take to get their financial affairs in order.

When someone dies, it is illegal to access their bank accounts unless you are a joint account holder on that particular account.

How to manage the finances of a deceased person

Aside from arranging the funeral, there are a number of steps you need to take before you can deal with the deceased’s financial affairs:

1. Register the death
2. Apply for probate
3. Remember inheritance tax!
4. Contact banks, utility companies and insurers

1. Register the death

When someone dies, you should register the death within five days.

This is the only way to get a death certificate which you must have in order to access bank accounts of the person who died.

2. Apply for probate

If the deceased left a will, they should have named an executor or administrator who will be in charge of handling the estate – that’s property, savings and belongings.

Once the executor has the original copies of the will and the death certificate (no photocopies allowed), they can apply for probate – the legal right to deal with the deceased’s estate.

If someone dies without a will, the application process is the same, but you’ll get ‘letters of administration’ rather than a ‘grant of probate’.

3. Remember inheritance tax

You’ll need to estimate the value of the estate and report your findings to HMRC to determine whether or not inheritance tax (IHT) is owed.

IHT won’t be charged if the inheritance is left to a spouse, civil partner, charity, or amateur sports club – otherwise, IHT will apply on any estates valued at over £325,000.

For the 2019/2020 tax year, the minimum tax-free threshold increases to £475,000 if the estate was left to children or grandchildren, including step and adopted children.

It is usually the estate – not you as the executor and/or inheritor – who pays inheritance tax, which is due six months after the death.

4. Contact banks, utility companies and insurers

Now you have the official will, death certificate and grant of probate (or letters of administration if there was no will), you can inform any banks, building societies, utility companies and insurers of the death.

Current and savings accounts

Bank accounts remain open until all the money is retrieved and the account formally closed. However, direct debits and standing orders will be cancelled.

Remember, it is illegal to withdraw money from an open account of someone who has died (unless you are the other person named on a joint account) before you have informed the bank of the death and been granted probate. This is the case even if you need to access some of the money to pay for the funeral.

As the executor, it is down to you withdraw any money and distribute it to the beneficiaries according to the will. A solicitor will be able to help you with the process.

If someone died without leaving a will, rules of intestacy apply.

There is, of course, the real possibility you do not know the details of all the deceased’s bank accounts or that some details have been lost. In that case, there are online tools that can help you discover lost accounts.

Debts

Debts such as mortgages, loans or credit cards are not passed on to the inheritors, but must be paid off before the remainder of the estate is distributed as per the instructions laid out in the will.

If you are unsure of what or how much money is owed, you’ll need to place a notice in The Gazette – the official public record of deceased estates. If you fail to do this and a creditor later comes forward with a claim against the estate, you might personally be liable for the unidentified debt.

Two months and one day after the notice is published and provided no other creditors have come forward, you can distribute the remaining estate amongst the beneficiaries.

Any debts taken out in a joint name become the sole responsibility of the survivor when one of you dies.

Insurance companies

Any open insurance policies need to be cancelled – remember, unless a claim is made, insurance companies do not pay out, so you will not recoup any payments the deceased made as part of their policies.

However, if they had any kind of life insurance (including mortgage life insurance and PPI) you can make a claim and the policies end.

Pensions

If the deceased was receiving their State Pension before they died, contact the Pension Service to stop the payments.

You may be able to claim their personal or workplace pensions (if they had any), but how much you’re entitled to largely depends on the type of pension they had.

Trusts

If a bank account is held in a lifetime trust, the successor trustee named in the trust document can present the death certificate and a copy of the trust to the bank to take it over.

How to get your affairs in order today

While much of the advice in this article is about how to manage someone else’s finances once they have died, there are several small things you can do for yourself or the person you are caring for now.

Special counsel at Foley & Lardner, Jamil G. Daoud, offers the following tips:

• Get hard copies of bank statements. Online statements have become the norm for current and savings accounts. Try to obtain detailed records by printing off online statements or requesting paper ones.
• Consolidate accounts. This might not be possible if the person has created a complicated web of savings accounts, but if there is a savings account here and a current account there, merging them could simplify matters.
• Add names to individual accounts. Determine exactly how the account is titled while the person is still alive. If you have power of attorney for someone, consider the following steps if your powers allow: Add one or more joint owners to the account; designate one or more payable-on-death beneficiaries for the account; transfer the account to the owner’s revocable trust.
• Pre-plan your funeral, if you can. One of the main reasons people need quick access to a person’s bank account after they have died is to cover the arrangements. Planning ahead alleviates that stress during an emotional time.

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Last updated: 18 April, 2019

How to spot and avoid financial scams

Online fraud and cyber crime has cost people and businesses in the UK an estimated £28 million in just six months, according to figures from Action Fraud.

It received over 12,000 reports of cyber crime between October 2017 and March 2018, with hacking of social media and email accounts the biggest problem.

Katy Worobec, the economic crime chief at UK Finance, said the finance industry prevented £1.4 billion in unauthorised financial fraud in 2017.

However, she said criminals were now targeting individual customers, and £236 million was lost to authorised push payment scams where customers were duped into making payments.

“We have a trust reflex,” she said. “It makes us forget things and it makes us lose control.”

This is particularly problematic when it comes to financial scams, with criminals changing their tactics to prey on that trust reflex.

“The line is that there is suspicious activity on your account and you need to move your money to a safe account,” she explained. “It might involve having to make a transfer.”

When our judgement is faulty

Dr Jane Cox, an international human performance specialist, and wealth psychology expert, says when it comes to money and trust, we walk a thin line.

“Of course at some stage we have to trust people with our money in order to be able to make investments, or know where our money is more likely to grow,” she says. “We also need to trust people to get into business with them, and very often our ‘gut instinct’, which is where a lot of our trust is based, will be a good guide when it comes to figuring out the type of people you can connect with, work with, make decisions alongside.”

However, the big harm with the trust reflex when it comes to finances is that often we are desperate to make more money, especially when things have been tight. It is then that criminals are most able to exploit our weaknesses, she says.

“This is where our desire to hear something positive, or believe something has come along that will get us out of our financial constraints, does tend to exert an influence.”

When you are desperate for some cash, it is very easy to hear what you want to hear. You dismiss any doubt or use of common sense to temper that initial reflex. This can cost us dearly.

Are some people more susceptible to scams than others?

Some people are more trusting than others, particularly those who may have been a little more sheltered and exposed to less fraud, or deceit, during the course of their lives.

“Unfortunately the ‘school of hard knocks’ plays a big role for many people when it comes to making more discerning financial choices,” Cox says.

“Very often that comes after a few wrong choices have been made, or the wrong people were trusted.”

Some people are more vulnerable than others. The elderly may be less knowledgeable about the prevalence of financial fraud and how it is conducted.

Young people might have the belief that they are the ones who will be able to make their millions before they turn 30, and that they will be able to do it quicker and easier than anyone else.

The cost of the cons

UK Finance estimates that people who are duped into transferring money to fraudsters lose an average of £3,000 each.

A total of £236 million was lost last year, with banks unable to return nearly three-quarters (74%) of it.

One of the most popular and effective scams involves tricking people into thinking they are moving money into a solicitor’s bank account for a house purchase, or to a builder. The criminals hack into genuine email accounts and send out false requests for payment.

By the time the people who have made the payment have discovered their mistake, the money has disappeared and the account into which they made the transfer has been closed down.

UK Finance said that in 2017 there were 43,875 reported cases of these scams, with 20% of the victims being businesses who lost an average of £24,355 per case.

Now read our digital banking guide

Make yourself harder to scam

Before you make a large payment, it is important to double-check the details, and you can do this by ringing the payee and confirming their bank details.

When it comes to all aspects of your finances, it is important to stay alert and think things through, says Cox.

“Do your due diligence when it comes to making a big financial decision,” she says. “Don’t believe everything you hear.”

Remain involved with your money and keep an eye on how it is working for you. Hands off investors are very vulnerable to losing out. If it sounds too good to be true it probably is too good to be true.

“Small risks tend to reap small returns, whereas riskier investment reap the bigger returns,” she says. That’s why it can be tempting to take a big risk, especially if you are down on your financial luck.

“However keep a balance, and always try and spread your investments over lower and higher risk returns. Never risk more money than you can afford to lose.”

How to prevent being scammed: Stop and think

Take Five to Stop Fraud is a government initiative to help you spot and prevent a financial scam.

It recommends you are vigilant in the following situations:

1. Requests to move money: Your bank, utility providers, and other big companies will never contact you directly to ask for your PIN, password, or to move money to another account. You should only ever provide personal or financial details when you actively consent to it – when you sign up for a new service, for example – or when you are expecting to be contacted by someone from a financial institution or service provider.
2. Clicking on links or downloading files: Never click on a link or download a file from an unexpected email or text. Odds are, a criminal is trying to load malware onto your device that will give them access to your personal and financial details. If in doubt, phone up the person who messaged you and ask if they really sent it.
3. Personal information: Likewise, be very wary of unexpected requests for any kind of personal info via phone, email, or text. Instead, contact the company or person directly using a known email or phone number and confirm that they need your personal info.

Now read our guide to staying safe online

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Last updated: 12 July, 2018

How Brexit will affect your finances

In less than a year from now – on March 29, 2019 to be precise – the UK is scheduled to leave the European Union.

Although much of the political debate has been over the rights of citizens to move within Europe and the pros and cons of the Single Market, Brexit will also have an affect on our everyday finances.

Here we look at how this might affect savings, business and credit cards in the UK.

Interest rates

On May 10, the Bank of England announced it was not changing interest rates, which would stay at 0.5%, amid fears that the UK economy was too fragile to cope with a rate rise.

This is good news for borrowers, including those people with credit card debt and mortgages, but bad news for savers. Consumer price inflation is currently at 2.5%, which means that the real purchasing value of savings is being eroded.

Fitch, the ratings agency, said the household savings ratio (relative to income) was now 4.9%, a historical low. It forecasts that the UK base interest rate will rise gradually to reach 1.25% by the end of 2019.

“The impact of the Brexit referendum on real wages may be fading, but Brexit uncertainty creates risks of a bigger shock to growth and employment,” it says in a Special Report “Weakening UK Household Finances Pose Risks” published on May 8.

Foreign exchange rates

The value of your holiday pound, and the exchange rate you get when you use your credit card to spend abroad, are affected by foreign exchange (forex) fluctuations.

As of May 2018, sterling is worth just over 1.13 euros, compared with May 2016, when it was worth 1.3 euros, and July 2015 when it reached a ten-year peak of 1.44. Since July 2016 it has traded within a range of 1.08 to 1.12 and has recovered from its low of 1.07 soon after the Brexit result.

GBP vs. EUR for the last five years

Xe.com

When you make overseas purchases using your credit card or debit card, your provider applies a foreign currency conversion rate. This rate will be affected by the variations in the value of the pound, and any volatility in exchange rates.

If the Brexit talks look as though the UK is failing to secure a good deal, sterling may fall again. The Bank of England may have to raise interest rates to protect the pound.

Angus Dent, CEO of ArchOver, a peer to peer lender, said: “With Britain’s GDP growth at just 0.1%, it’s no surprise that the Bank of England has kept interest rates at 0.5%. [The] decision is yet another result of the uncertainty surrounding the UK’s financial health. And keeping rates so low means savers lose out once again.”

Credit card rates and rewards

While interest rates remain low, credit card companies are unlikely to increase their own interest rates. However, the era of rewards and benefits for holding a card seems to be at an end, says Andrew Hagger, founder of MoneyComms, the money information service.

“The only decent rewards you get now is if you use a card to buy items within a certain store – for example using a Tesco card to shop instore. If you use the Tesco card, or ones from M&S, John Lewis and Sainsbury’s outside their own shops, the rewards are slim. I don’t see any major changes in the pipeline.”

Credit card fees

Until the Brexit deal is finalised, the government in the UK has to comply with EU directives. After Brexit, all existing European law will be incorporated into UK law.

This includes a ban on credit and debit card surcharges and applies to all purchases made within the European Economic Area (EEA). It means airlines can’t add hidden charges for online bookings. There are unlikely to be any changes in the short term, as Teresa May has heralded this move as a victory for consumers.

Savings compensation

If you have savings with a bank or financial institution that goes bust, you’ll be compensated by the UK’s Financial Services Compensation Scheme (FSCS).

The compensation limit is £85,000, equivalent to the €100,000 deposit protection limit in the EU. Similar terms are likely to be included in UK law when the changeover happens. Read more about compensation limits on the FSCS website.

Interchange fees

The EU put in place a 0.3% cap on credit card interchange fees that was aimed at reducing the cost of card payments. The UK Cards Association estimated that almost £900 million in savings should be passed onto consumers.

Interchange is a fee paid by the retailer’s card acceptance provider to the consumer’s card issuer each time a card payment transaction occurs.

The cap on fees applies on most product types within the European Economic Area (EEA).

This will become law in the UK after Brexit, and is unlikely to change, says Andrew Hagger, of MoneyComms.

“All the EU laws will be incorporated into English law and then the government will look at which ones need to be changed. Interchange fees aren’t going to be a priority as there are many other issues they will need to look at, so I anticipate things staying much as they are for several years at least.”

Business and the economy

There are still some concerns about the health of the economy, which is why the Bank of England decided not to increase interest rates this time.

Brian Johnson, Insolvency Partner with the accountant HW Fisher, said that the economy had been affected by concerns over Brexit, and would continue to do so while the uncertainty remained.

“Immediately after the Referendum there was doom and gloom, and then the stockmarket recovered and the pound came down which made exports cheaper and interest rates stayed low,” he said. “That was a false dawn, with people saying that Brexit was not a problem.”

Behind the scenes, businesses were delaying decisions on investment and recruitment until the negotiations were concluded, he said, and there would be more insolvencies among businesses. This was not necessarily a bad thing, as poorly-run companies would be taken over by more efficient managers.

Now read: How to find the best current account

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Last updated: 28 January, 2019