Retirement promises freedom from work, and life as you like it. Well, yes: but only if you plan for it. Because it’s hard to enjoy world-wide travel or pursue a new hobby if you’re worried about running out of money.
Though it may seem far-off, planning ahead will help determine your lifestyle as well as your happiness in retirement. Here are six ideas to help get you started.
- Set a target retirement date
Put simply, this is the age you expect to retire at. Know what it is to help ensure a smooth transition into retirement.
- Track your expenses
Being on top of what money comes in, and what goes out, is crucial. Because by analysing your spending now, you’ll be in a much better position to work out how much you need to retire comfortably.
- Make a retirement budget
Working through a retirement budget is equally important. Use information about what you currently spend to estimate what will change after retirement in terms of your income, lifestyle and needs.
Some areas will see a reduction, whereas others will see a rise, like heating, leisure and healthcare. Make a distinction between fixed, essential costs and those you may have more flexibility with.
- Save, save, save!
“It’s never too soon to save” has become a familiar phrase – and with very good reason.
If you stop working in your 60s, your retirement savings may need to support you for 30 years. Do what you can to set some of your money aside for greater financial freedom in future.
- Maximise your income
Understand your pension choices so you can decide which one is best for you and your family. Consider different investment options, too.
Each will have its own pros and cons, so take your time and seek financial advice if necessary.
- Have a purpose
Life planning is just as important as financial planning. Ask yourself: what do you want out of life? What do you enjoy and what new hobby or interest would you like to start in retirement?
Thinking about what you want to do in your golden years will help decide where your cashflow will be going.
Remember to revisit your plans every few years to ensure you get the most out of your retirement. Levels of income and the cost of living are subject to change. So is your definition of future fulfilment and fun.