However, developing a plan for your post-working life can feel daunting, meaning that many people put off doing it. To help you create a successful retirement plan, follow these five basic steps.
Step 1. Get A Grip On Your Finances
If you are concerned that money could be tight when you retire, you should start immediately to assess your current spending and get a grip on your finances. Cutting back on non-essential expenditures will free up some money to save into your retirement fund. If you need help, try using a budgeting app or other money management tool. You could also search online for a 'certified financial planner near me' to help you reach your financial goals. Don't forget if you haven't made one yet, to make a will. You don't have to spend a lot on a simple will, check out a post office will kit for example.
Step 2. Consider Where Your Retirement Income Will Come From
Workplace pension schemes are a common source of retirement income, and you may have more of these than you think. If you’ve moved jobs over your working life, chances are you could have as many pensions as you’ve had employers. Old or misplaced pensions could add up to a significant amount, so you should make every endeavour to locate these. You can identify them yourself using the government’s Pension Tracing Service. Alternatively, you can use a third party to trace them for you, but this service will come at a cost.
While you are on the government website, you should also look at how much State Pension you are likely to receive. Even a full State Pension is unlikely to be sufficient to keep you in the lifestyle you desire for your retirement. However, it is a good top-up for your other sources of retirement income.
You might have other sources of income that you can use in retirement, such as rental property, investments, or other personal pensions. Equity release is another common means of raising capital for retirement, but you may want to seek financial advice before going down this path. Always consider the tax implications of whatever income sources you have for retirement.
Step 3. Be a Bit More Selfish
Supporting your family financially is an admirable quality, and you should congratulate yourself on it. However, saying no sometimes is also not bad, significantly if you are sacrificing your retirement funds to help someone else out. Talk to your family about your retirement plans, and if need be, let them know that financial support might be a little less. Having such conversations early will avoid any disappointment or embarrassment later on.
Step 4. Visualise Your Retirement
Try to create a mental picture of the lifestyle you want in retirement. It is challenging to know exactly how much you’ll need when you retire, so visualising your retirement years will help.
One thing is for sure; you’ll want as much money as possible in your pension pot. However, you cannot be entirely sure how the money invested in your pension scheme will grow. That’s why it’s essential to regularly review your pensions and top them up if needs be.
Step 5. Get Regulated Financial Advice About Your Pension Options
When you reach fifty-five, you now have much more freedom with accessing your pension funds than before. You can now take a 25% tax-free lump sum and various options with what you do with the remainder. You must make the right decisions over your pension, and a regulated financial advisor can guide you through the most suitable options for your situation.
Conclusion
Planning for your retirement is crucial if you are to enjoy your post-working life. Hopefully, these five steps will help guide you along the path to successful retirement planning.
If you are looking at options for your pension or retirement, get in touch with a regulated pensions specialist like Portafina or, view the information at Pension Wise.
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