You may feel that retirement planning isn’t the most riveting topic, but the sooner you engage with the concept, the sooner you’ll be able to put plans in motion to secure your financial future.
If you are disengaged from thinking about your retirement, you aren’t alone as a recent study1 reveals. In the UK, 45 to 54-year-olds spend on average two hours more per year planning their summer holiday or redecorating, than they do putting a strategy together for their retirement.
INVEST TIME TO REAP THE BENEFITS
Your retirement plan is unique to you. Planning for it isn’t just about getting your finances organised, you need to really think about what you’d like to do and how you’d like to live. Depending on your circumstances, you may see retirement as an opportunity to completely change your lifestyle, maybe move home, travel the world, learn a new skill or just put your feet up!
Like all big projects in life, the more time you can invest in thinking it through, the better the outcome will be. Changes in legislation have given those about to retire far greater freedom when it comes to using their pension pot, but freedom brings greater individual responsibility. With longevity increasing, more people than ever will spend longer in retirement. Getting financial planning advice before accessing your pension pot can go a long way to help alleviate financial worries later on in life.
BUDGETING FOR YOUR LIFESTYLE
Spending in retirement tends to follow a u-shaped curve. People often spend more money in the early, more active years of their retirement, with spending decreasing in the middle years and increasing again later in life when additional care and medical expenses are more likely to be required.
It makes sense to draw up a budget for your retirement that covers your likely income needs. Things to think about include factoring in income from employment, or will you choose to give up work altogether? You may decide to downsize from a family home to a smaller retirement apartment, meaning you can extract some equity to bolster your income. Do you intend to help your children or grandchildren financially? You will also have to think about the likelihood of needing care in your later years.
However you plan to spend your retirement, taking professional advice early can really help create a successful roadmap for your financial future.