Making a no-holds-barred assessment of your finances can be daunting. However, biting the bullet and making a plan for your retirement will reduce financial stress in the future. Obtaining competent and regulated financial advice will assist you in planning for retirement; check out Portafina.
Here are five simple steps to follow for making a successful retirement plan.
Start getting to grips with your finances immediately.
If you think that money will be tight when you retire, you should start immediately getting to grips with your finances. An excellent way to do this is to use budgeting apps or other money management tools.
These will clarify your spending, as you can divide your money into various spending pots. Also, if you start budgeting now, you may well find you have a little extra cash left at the end of each month.
Assess your sources of income for retirement.
If you’ve had several employers over your working life, you may well have as many workplace pensions. Locating old, forgotten, or misplaced pensions can significantly boost your retirement savings.
Even if these pensions do not amount to much, they still may be sufficient to cover some essential expenses when you retire. Therefore you must try to locate them as soon as possible.
If you struggle to contact the pension provider or have forgotten who that was, you can get help through the government’s pension tracing service. You can find this resource on the gov.uk website.
While you are on that website, you can also check on your State Pension forecast. Although this benefit may not be sufficient for your retirement on its own, it serves as an excellent supplement to your other sources of retirement income.
You may have other sources of income for retirement, and these could include rental properties, other investments, or part-time work. Whatever these income sources are, ensure you consider the tax implications of each.
Think more about yourself.
Around 20% of British adults claim that providing financial support to family members prevents them from saving sufficiently for their futures. Helping your family is an excellent thing to do, but not at the expense of your retirement security.
Leaving yourself short of money for your retirement means you will be able to help your family less, should they need it. Have a discussion with your family about finances, as this will help avoid disappointment and awkwardness in the future.
Build a picture of your retirement.
Consider how you want your retirement to look like when you stop working. Of course, it is challenging to know exactly how much money you will need for your retirement. However, working on the premise that you will need as much as possible is a good starting point.
By building a picture and visualising your ideal retirement, you will start to understand what this lifestyle will cost you. You also need to work out how much income you will have during retirement. Calculating this can be challenging, so you must regularly review your pension’s performance to make sure it remains on track. You may need to make top-up payments if your pension is falling short.
Get some help understanding your pension options.
You may find your options for your pension to be complex, but you need to understand them fully. From the age of 55, you can take up to 25% of your pension funds as a tax-free lump sum. However, this may not be the best option for your situation. Therefore, Consulting with a regulated financial advisor may help you with this aspect of your retirement preparations.