Successful retirement planning involves taking a close look at your finances. Although this may fill you with a sense of dread, getting organised now will help you avoid money concerns in the future. Therefore, read on to discover five tips for successful retirement planning.
1. Get a grip on your financial management today.
If you are concerned about having too little money when you retire, it’s pointless waiting to deal with it. The time for action is now, and you should start gripping your finances and assessing your current spending.
Money management tools, such as budgeting apps, can show how you spend your money. You can divide your funds into different parts, allocating a certain amount to each category of your spending. Getting into this habit today means you’ll be better prepared for your retirement money could be tight.
2. Consider your retirement income streams.
Pensions are likely to make up a considerable proportion of your retirement income. The good news is you may have more of these than you think. If you’ve moved employers throughout your career, you may have pensions you have misplaced or forgotten. Even if these are small, they will still cover essential expenses in retirement.
Therefore, you must track down any old pensions you have. You can do this by using the government’s pension tracing service. You need to enter some basic personal and employer information and the application contract for a pension provider.
Another online service provided by the government is a state pension forecast. Although it is unlikely to support your retirement alone, the state pension is a reliable source of income, and you should understand how much you will receive.
You may also have additional income streams such as property, investments, or part-time work. Regardless of your income source, you should know the tax implications.
3. Consider yourself.
Supporting your family financially is an admirable trait. However, you should not put your retirement plans at risk by doing so. Considering yourself before others is fine, as he is saying no occasionally. After all, if you are financially secure in retirement, you will be better positioned to support your family should they require it. You should have conversations about your finances in retirement early enough to avoid any disappointment or awkwardness when situations arise.
4. Visualise your retirement.
By thinking about what you want to do when you retire, you can create a picture of your retirement lifestyle. Will you be remaining living in your current home? Would you like to travel more, buy a holiday home or even consider moving into a retirement property such as Enterprise Retirement Living? This visualisation will allow you to determine how much money you will need to support that lifestyle. Of course, it’s challenging to understand precisely how much you will need. However, you should be saving as much as possible into your pension pot.
Also, you should keep track of your pension’s performance and ensure that the management charges do not rise too sharply. Both these things can erode your pension funds, potentially leaving you short of income when you retire.
5. Seek regulated financial advice.
You should understand your options for accessing your pension funds. With the introduction of pension freedoms, you know I have the option of taking up to a quarter of your funds as a tax-free lump sum when you reach 55. However, this may not be the right decision for your situation. A regular financial advisor can look at your pensions, assess your options, and help you make the right decision. Look into Portafina.