Want to create a successful retirement plan? Follow these 5 simple steps
The words 'planning' and 'finances' combined may be enough to send shivers down your spine, which is the case for many people. However, getting stuck into some serious planning for your retirement finances is essential if you are to enjoy your post-working years.
The good news is, we can help you with these five simple steps to successful retirement planning.
First Step. Get a Grip of Your Finances Immediately
There is no doubt about it; your income in retirement is likely to be much lower than it is while you're working. Therefore, now is the time to get a grip on any loose spending. There has never been more help available to do this, with dozens of apps to help organise your budget. Start cutting back now, and you can put a little extra into your pension fund each month.
Second Step. Consider Where Your Retirement Income Will Come From
You might be in for a pleasant surprise with this one. If you've changed employers several times throughout your working life, the chances are you'll have as many workplace pensions.
Tracking down lost or forgotten pensions is critical, as even a small pension pot could help with your living expenses during retirement. You can get help with tracking down old pensions through the government’s online Pension Tracing Service. Or, you can contact your old employer to find out what the pension scheme was.
Remember, you will also be entitled to a State Pension. How much you'll receive depends on the amount of National Insurance contributions you've made over the years. If you don't know already, you can get a pension forecast from the Gov.uk website. The State Pension may not be enough to sustain the lifestyle you want to have, but it will contribute to covering your monthly spending.
Other forms of income you might have include rental properties. If you have an additional property, you could also consider releasing some equity for your retirement. Regardless of your source of retirement income, you should be aware of the tax implications.
Third Step. Start Putting Yourself First
Approximately 20% of Brits believe that providing financial support to family members inhibits plans for their retirement. Supporting your family is admirable, but it's also acceptable to say no now and again. After all, you can be no financial help to them if you've not got enough money for yourself in retirement. Sit down with your family and discuss the financial situation. This conversation could eliminate any embarrassment or disappointment later.
Fourth Step. Get a Clear Picture of Your Future
Start to visualize the way you want your retirement to look like, and how much money you're going to need to achieve this lifestyle. It is challenging to put an exact figure on the amount of money you need to put into your pension pot; it is easy to understand that it should be as much as possible.
It is also a challenge to predict what your pension pot's final value will be. You can get as much understanding as possible to conduct regular reviews of your pension fund. Doing this will enable you to take action to rectify underperformance.
Fifth Step. Seek Financial Advice
You must understand your options for accessing your pension funds. When you reach fifty-five, you now have the option of taking a 25% tax-free lump sum from your pension. Although this sounds appealing and might well suit your situation, you should seek regulated financial advice to ensure that you consider all the implications. For instance, taking the lump sum might leave you with limited income on retirement.
If you are looking at options for your pension, get in touch with a regulated pensions specialist like Portafina or, view the information at Pension Wise.
