Why planning for retirement is important
Planning for retirement is becoming ever more important these days, with life-expectancy in Britain increasing, real-terms living wages stagnating at best, retirement age increasing and April 2017 providing the final deadline for UK companies to get on board with mandatory pension contribution plans, many people end up postponing their retirement. As a result, we’ve been thinking a lot about pensions, recently, here at Business First.
So, we thought, ‘start planning early so you don’t have to postpone your retirement’ and ‘what better time to write a blog about retirement planning’?
Planning for retirement financially
Make sure you start early. By early, I mean: it can never be too early.
Retirement is pretty much about one thing: pension, pension, pension, pension, pension!
When you’re saving, and paying into your pension – private or through work – be disciplined, make sure that you save both enough, and regularly. If you have to make small sacrifices to do it, make them – it will be worth it in the long run. Make a monthly budget – if you haven’t already – and add savings for your retirement fund to it as a fixed cost; that way you will always be able to afford to save.
It can also be worthwhile getting a good financial adviser. They can help you to choose the right private pension plan, choose wise investments and work out what you can afford to save without compromising your quality of life before, or after, your retirement. They will also, hopefully, help you to stay away from get-rich-quick schemes that will burn through your savings without giving you any return on your investment.
It can also help to gradually start saving more and spending less, the closer you get to retirement age.
Be aware that things can change
When planning for your retirement, and adding to your retirement fund, recognise the variables and plan – as well as you can – for them.
Be aware that your investments and returns can vary, inflation rates can change, interest rates can change, future health care needs and prices can change; your lifespan can change due to ill health or even due to improvements in medical science and your lifestyle.
Not only that, but income tax rates can change – and your pension is subject to income tax – as well. Regardless of how well you think you’re prepared, inflation can also affect the real cost of your retirement lifestyle, too.
Recognise and accept that these things can happen, plan for them as well as you can and embrace them. That way, you’ll never be surprised and you’ll have a much more manageable retirement.
With all this in mind, it is a good idea to review and adjust your retirement plan on an annual basis. Take into account pay-rises, unexpected drains on your savings and anything else that might happen. Pay more into your pension when you can afford to.
The transition from work to retirement
Think about when you started work; how helpful would it have been to have had something in place to gently guide and ease you in to your new role?
To help whoever it will be that takes over from you – and to ensure the company that has looked after you for so long isn’t left in the lurch – to make a smooth transition, get organised before you leave. Don’t leave half-finished jobs if you can help it. And if you can’t help it, ensure that your progress is well documented.
Prepare an orientation booklet for your successor. Give them tips on how you managed to do your job, and even tips on what not to do.
You could even become a mentor to your successor before you leave, ensuring that both of you are on top of things by the time you come to leave.
It can also sometimes be helpful to phase yourself out gradually; start working part-time before retiring fully. This will help your company adjust to life without you, and most importantly, help you retain an income whilst adjusting to having so much free time.
Planning for retired life
Leaving work forever may seem like the Holy Grail, but countless people find that once they retire the amount of free time they have is overwhelming, they feel lost, don’t know what to do with themselves.
To avoid this black-hole in your life, try planning for your retirement beforehand.
You could volunteer for a charity, start working out, pick up a new sport or hobby; calligraphy for example. Maybe there are a variety of places you’ve never got around to going to – travel now you have the time. See family and friends, get a freedom pass so you can get in to various tourist attractions throughout the UK for less – or even free.
Whatever you do, get a routine, don’t let your free time stop you. Don’t waste it and make sure you enjoy the best years of your life as much as you possibly can.