Planning for retirement – It’s never too early

Statistics projected by Office for National Statistics (ONS) have indicated that the UK’s population is ageing. It shows that in 50 years’ time, there would be an additional 8.6 million people aged 65 years and over – a population roughly the size of New York. Most people associate the age 65 with Retirement – a new beginning, free from the responsibilities of one’s profession. As humanity has progressed, the reality of retirement has evolved to accomplish much more than freedom from work. People are inclined towards achieving continued self-fulfilment, profound communal interactions, and intellectual stimulation. Financial security is still considered a gateway to achieve total freedom, achieve peace of mind and help you achieve what you really want to do in your retirement.

Fewer people enjoy the guaranteed income that comes with a final salary pension, and you now must wait for longer to qualify for the state pension.

This article focuses on pre-retirement strategies to building wealth to achieve your retirement goals. 

1. Gather and organise your financial data

What does not get measured does not get improved. Start by collecting all relevant financial data – current assets, liabilities, total income and most importantly expenses. This will help you set a starting point and prepare for a realistic goal to achieve.

2. Work out some numbers

• How much will I need to retire? – It largely depends on data gathered in the step above as it can help us with future projections. Many people think £250,000 will be enough, whereas some people struggle with £2 million. There is not a set figure to retire, as your requirements are unique.
• What income will I need? – Usually people tend to spend a little more during the first decade of retirement thanks to exotic holidays, financial gifts to children, taking up an expensive hobby etc. As you settle in retirement, your total expenses also settle down a bit. Finally, there might be a need for long term care and other medical expenses.

3. Saving/investing for retirement

Pensions are one of the best ways to save for retirement. Automating pension contributions has proven to be an effective strategy to build wealth. They also offer attractive tax relief. A yearly pension contribution of £10,000 would cost an additional tax rate taxpayer only £5,500 in real terms. Any growth inside the pension is also tax free.

ISAs provide tax free growth and they generally provide flexibility on access. There are various types of ISAs for different purposes. Lifetime ISA (LISA) offers a government top up of 25% of your contributions up to a maximum of £1,000 p.a. and is available for individuals between 18-40.

4. Review

Once you have made necessary arrangements, constant monitoring and review will make sure you are on track.

People who have taken financial advice in a timely manner have accumulated significantly more retirement funds than those who have not.

Retirement is not an age; it’s a financial status! Contact me for a no-obligation chat or more information