Struggling To Create A Successful Retirement Plan? Follow These 5 Simple Steps
Putting the words’ planning’ and ‘finances’ together might send shivers down your spine. However, doing some concerted planning of your retirement finances is crucial if you are to enjoy your post-working years to the fullest.
Have no fears; we can help you with these five simple steps to successful retirement financial planning.
Get On Top of Your Finances
If you have worries about the amount of money you’ll have to retire, now is the time to do something about it. Take a close look at your spending habits, and use online tools to help you do this. Create a budget as soon as possible and get into a budgeting mindset. Doing so now will enable you to continue the habit into retirement.
Work Out Where What Your Retirement Income Will Be
This step might give you a pleasant surprise. If you’ve changed employers during your working life, you could have several workplace pensions. Tracking these pensions down is crucial, even for small pension pots, as these will help pay your living expenses when you retire. The government’s online Pension Tracing Service can help you track down old pensions. Alternatively, you can contact your old employer to find out who their pension scheme provider was.
Of course, you will also receive a State Pension. How much you get depends on the level of National Insurance contributions you’ve made during your working years. If you’re not sure, the Gov.uk website can provide you with a pension forecast. The State Pension may not be sufficient to sustain the retirement lifestyle you want, but it will help cover your monthly spending.
Other income sources you could have include rental properties, or you could consider releasing some equity from your home for your retirement. Regardless of your retirement income sources, it would be best if you understood the tax implications.
Be a Little Bit Selfish
Supporting your family through financial difficulties is an admirable quality, and you should be proud of yourself for doing so. However, sometimes, saying “No” is also not a bad trait to have. Indeed, this is certainly the case if you are sacrificing your retirement funds in the process. It would help if you spoke with your family about your retirement plans. If needs be, let them know that your financial support may have to be reduced. Having these conversations early is best to avoid disappointment, embarrassment, or hard feelings later on.
Create a Picture of Your Financial Future
Visualise what you want your retirement lifestyle to look like. Try to picture what you’ll need and what you need to have and do to achieve this ideal situation. Of course, understanding precisely what you’ll need can be challenging. A simple guiding principle is that you’ll need as much as possible, so start saving as much as you can comfortably afford into a pension.
Predicting your pension pot’s final value can also be a challenge. Conducting regular reviews will enable you to take remedial action should you notice that your pension is underperforming.
Seek Professional Financial Advice
Understanding your options for accessing your pension funds is crucial. From age fifty-five, you now have an option to take a 25% tax-free lump sum from your pension pot. This option may sound appealing, and it would suit your situation. However, you should seek regulated financial advice before deciding to do so, as this will allow you to consider all the implications, check out Portafina. For instance, taking the lump sum might leave you with insufficient income when you retire.
Planning for retirement is essential if you are to enjoy your post-working years. Hopefully, these five steps will put you on the right track towards successful retirement planning.