The ABC of Retirement Planning
Picturing yourself in retirement may be difficult. However, planning is key to making sure you’re in the best possible position whatever your circumstances may be, whether that’s to look after dependants, to travel or something completely different.
Having a good understanding of what your retirement goals are, allows you to plan the cost and time frame of events during retirement, meaning you have the longest time available to prepare.
When it comes to pensions, many feel they don’t know enough to become involved in managing their retirement plans.
Whether your retirement is years away or just around the corner, just thinking about it can be overwhelming. Here are 3 tips to start you off:
Assess: What do you NEED?
By understanding your income needs and likely expenses, you can plan to make sure you have what you need. The Money Advice Service can help you create a retirement budget. It may help to do 2 versions; ‘essential’ and ‘ideal’.
Build: What can you SAVE?
You’re never too young to save for retirement. For millennials and many others, retirement seems so far away it doesn’t seem important to save for. However, it’s easier than many think to build up a healthy pension, for example saving £1.70 a day could add up to £150 a month saved if your employer matches your contributions. This could be as easy cutting that morning coffee! *
* Saving assumes contribution is made by salary sacrifice for a basic rate taxpayer
You are never too old either! If you haven’t retired yet, there is always time to improve your pension pot, from increasing your contributions to deferring the date to which you start taking your pension to allow for more savings to build.
Also, do remember that you can continue to work despite accessing your pension pot, which may provide some handy income.
Calculate: What have you GOT?
It’s easy to acquire a good number of pension pots over the years with job changes and company restructures. If you think you may have lost a previous pension, the Government’s Pension Tracing Service may be able to help.
Once you have totalled up your pension pots, make sure you include your state pension (you can get a forecast via gov.uk) as well as other savings and investments you may have.
Tools such as the Pension Calculator on the Money Advice Service website can help you gauge what you can expect from the retirement savings you have already built up.
Early planning is key as you can set goals and adjust your pension contributions to fit. Acting now will allow you to live the life you want to live during retirement!
However, if you are thinking about retiring soon, the rules and options can get pretty complicated, so it’s worth getting specialist advice. You can get this free via Pension Wise or you may be able to access ‘At Retirement’ advice via your employer.