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You may feel daunted by the prospect of taking a detailed look at your finances, but planning for retirement today will reduce your financial concerns down the line. To give you a hand, we’ve compiled five straightforward steps to retirement planning success. Planning for your long term future is crucial; when considering your pension, take on expert advice from a specialist such as Portafina.
Step 1. Start gripping your finances today.
Your retirement may be imminent, or it could be several decades off. Regardless, the best time to get to grips with your finances is right now. Doing so will give you the maximum amount of time to prepare for retirement and reduce any financial concerns you may have for that time of your life.
Budgeting apps and other financial tools can help you gain transparency of your spending and help you organise your finances. Creating a budget and sticking to it will help you save. This additional money can go into your pension fund as a top-up payment each month.
Step 2. Understand what your potential retirement income will be.
If you have had several different employers throughout your career, then chances are you could have the same amount of workplace pension plans. You may have lost track of some of these plans as you no longer contribute to them. Therefore, you should endeavour to trace them.
Even if they contain only a tiny amount, they can still contribute to your daily expenses during retirement. If you’ve lost your pension details, you can use the pension tracing service on the government website. The service is free to use, and all you need to do is input some details about yourself and your employer.
You should also consider the State Pension as a form of retirement income. Once again, the gov.uk website is where to go to get a forecast of this benefit. Although it is unlikely to sustain retirement by itself, the State Pension is a steady form of income during retirement.
Other forms of income you have may include rental property, part-time employment, or other financial investments. Regardless of your retirement income, you should consider what the tax implications are for each source.
Step 3. Consider yourself more
Approximately two of every ten British adults state that supporting family members financially prevents them from making their own financial provisions for retirement. Although supporting your family is an admirable trait, you should not let it jeopardise your retirement plans.
You should have conversations with your family about the level of support you can provide during your retirement. You should have these conversations early to avoid potentially awkward situations later on. Hopefully, your family will understand. After all, if you are financially secure in retirement, you’ll be able to support them more than if you are struggling.
Step 4. Visualise your retirement.
Take time to contemplate, think about your retirement, and consider your lifestyle after working. Build a picture of your life in retirement and see yourself doing the things you want to do and living a comfortable life.
This picture will help you understand what you want and how much it is going to cost. Then, you can work out a plan to achieve the income you need to sustain your ideal retirement lifestyle.
Step 5. Get some help.
You must understand the various options you have for accessing your pension funds. Following pension freedoms regulations edition 2015, you can access up to a quarter of your funds as tax-free cash from the age of 55. However, before taking too much cash, you need to consider whether you will leave yourself short of income when you come to retire fully. Therefore, you should get some help in making your decision, and a regulated financial advisor is the best person to give such advice.
