Starting Early Gives You An Advantage
Also, don’t panic. While it may seem daunting if you have realised that you are well into your career and haven’t planned your retirement finances, there are moves you can implement regardless of the stage you are currently at in your career. The best thing you can do is arm yourself with as much information about your current retirement finances position and tools out there such as the Lifetime ISA, Stocks and Shares ISA, and private pension schemes.
Be Clear On What Your Retirement Profile Looks Like
When it comes to planning your retirement finances, working backward is always recommended. One of the best things you can do early on when planning your retirement finances is working out your numbers and retirement goals. Think about the kind of lifestyle you would like to have in retirement, whether you will continue working and what your bills will cost. Will you downsize your home in retirement or remain in the family home? When working out your retirement costs, take into consideration both essential and non-essential costs such as utilities, travel, and food (essential) along with plans for vacations and hobbies (non-essential). Tools like a pension annuity calculator can help you estimate the amount of income you can expect to receive based on interest rates, pension contributions, and life terms.
Capitalise On Employer And Government Aid To Reach Your Retirement Goals
If you are employed, you can also utilise any employer contributions to your pension. Currently, the state pension is £137 per week or £593 per month. Since recent estimates have put the cost of retirement at £13,000 annually (for an essential lifestyle) or £19,000 (for a comfortable lifestyle), there is no doubt that you will need to top this up. Many workplace pensions include a contribution of at least 3 percent from your employer – the average employer pension contribution is 4.3 percent. This can help you reach your goal much quicker.
Also, remember to review your retirement finances each decade. As you get older, progress in your career, and move through life, your approach to your retirement finances should change. For instance, it is recommended that your investment strategy in your 20s be more aggressive than when you are investing in your 40s. Your retirement goals and budget may also change as time passes, so regularly reviewing your finances means you can stay updated and on track to achieving the ideal financial position in your retirement years.