Getting into the nitty-gritty of financial planning can seem daunting at first. However, creating a retirement plan can simplify things and help make your post-working life more comfortable. Read on to learn five tips for a successful retirement plan.
Start Preparing Immediately
Your retirement is getting closer every day, so your preparations should start immediately. First, start by getting to grips with your finances, and you can do this by using simple budget tools and applications. Setting and sticking to a budget now will help you save more for your retirement. Also, it will get you into the habit of sticking to a budget – something you’ll need to do when you retire.
Calculate Your Retirement Income
If you’ve moved between different employers throughout your working life, the chances are you will have several workplace pensions. You might not be aware of these pensions, but they could have a significant amount of money in them, and that money belongs to you. So ensure you track down any lost or misplaced pensions and get them valued. The government provides a Pension Tracing service on the gov.uk websites, and you need a few basic details to start your search.
You will also likely qualify for the State Pension. This benefit is currently £179.60 per week, equating to an annual salary of around £9,339. Although this amount might provide a good foundation for your retirement income, it is unlikely to sustain the lifestyle you desire when you retire. Therefore, you must put some other income plans in place. Of course, you might already have some other investments or rental property that will provide you with retirement income, so include these in your calculations too.
Think About Yourself More
It is admirable that you want to support your family financially. However, around 20% of Brits reckon that doing so will stifle their own retirement plans. You should realise that there is nothing wrong with putting yourself first sometimes, particularly when it comes to your retirement. After all, if you are financially secure in retirement, you are more likely to be able to support your family more.
Visualise Your Retirement Life
Visualise the lifestyle you want to have in retirement, and consider what you need to achieve that. Knowing exactly what you need to save into your pension is challenging, but a good rule-of-thumb is to save as much as you can afford. Keep reviewing your pension to understand how it is performing, and take action if it is not. Also, keep an eye on the fees you’re paying for your pension. If they are too high, they could be eroding your pension’s growth.
Seek Financial Advice.
You must understand your options for accessing your pension funds. Thanks to pension freedoms, you have plenty of choices of how to access the money in your pension pot from the age of fifty-five. For example, you can take 25% as a tax-free lump sum and other taxable lump sums. However, you should be aware that taking too much from your pension pot could leave you short of income when you retire. So before you make any decisions about accessing your pension funds early, talk to a regulated financial adviser.
Doing some basic financial planning will increase your chance of having a comfortable and rewarding retirement. Hopefully, these five tips for a successful retirement plan will set you on course for the retirement you deserve. If you are considering your pension or retirement, consider using a regulated pensions specialist like Portafina or, view the guides at the Pensions Advisory Service.