How to financially prepare for your retirement
Are you coming up to retirement age, or eyeing an early finish? Either way, being able to relax after working hard to support yourself and your family for so long will be joyous. That being said, you’ll need to have confidence in your financial position to enjoy retired life in the way that you want to. Did you know almost one fifth of Brits say they have no form of private or workplace pension?
With the state pension age recently increasing to 66 for others, and the cost of living surging in the UK, careful financial planning is more important than ever. How you plan will depend on the age you’re at right now – but generally speaking, the earlier you can start the better.
If retirement is on the horizon for you, read some of the key things to consider and check off below.
Trace any old pensions
It’s common to lose track of pension pots, especially if you’ve moved around multiple jobs. If this is the case for you, it’s worth tracing them through the government website to recover any money you’re entitled to.
You’ll then need to get in touch with your previous employer and the pension provider to find out how much your lost pension is worth and what your options are.
Clear your debts
Whether through mortgages, credit cards, loans or all three, it’s normal to accrue debt over your lifetime. But managing these commitments will get trickier with a reduced retirement income, so it’s worth paying it off now if you can.
Paying off debts early will reduce the amount of interest you pay too, saving you money in the long run.
Plan your estate
You might not want to think about what will happen when you die yet, but estate planning will give you more confidence as you approach later life.
This means understanding the value of your savings and possessions and how this might change over time. By estate planning, you’ll learn what your retirement income will look like alongside what you plan to leave behind for loved ones. You could also minimise potential inheritance tax issues.
Work out a realistic retirement budget
Having realistic expectations about your post-retirement spending habits will help you understand if and when it’s actually feasible to retire and lead the life you want to.
You might be mortgage-free and no longer needing to commute to work. But you might also want to travel more, upgrade your home or tick off other long-term wishes, as well as generally having more time to go out and spend money.
Speak to a financial adviser
Tasks like calculating your retirement income and working out how much you need are complex, and any decisions you make could affect you for the rest of your life. You might decide it’s best to speak to a professional to get a better idea of where you stand.
Many financial advisers will help you review your finances over time too. The help they offer could be worth far more than what you pay for their time.
Are you feeling fully confident about retiring?
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