Retirement planning is vital for ensuring that you can meet your goals for retirement, but it can be fairly easy to put off and worry about later. However, chances are that you don’t want to work forever and you may already have big ideas for how you want to spend your retirement.
In this short article, Ricky Clark from Henderson Loggie Financial Planning shares the top 10 things you should be thinking about when planning for retirement.
1. When do you want to retire and how realistic is your time frame?
You want to be thinking of a few important factors. You may wish to work on past your retirement, or you may indeed wish to retire early.
2. What pension provision do you have in place?
It’s really important to review everything that you’ve gathered throughout your employment history and this could be a variation of different types of pensions. This may be looking at your current employment pension or previous employment pensions. You may have also saved into a personal pension yourself, and of course not forgetting the state pension, where you can have a look to see what you may get and when you will indeed retire.
3. What will you get from your state pension?
Ultimately, what you will receive from your state pension is based on your national insurance contributions that you’ve built up over your employment years. You can find more information about this on the government website with only a few of your personal details.
4. Consider what income you will need to maintain your current lifestyle
After having looked at all the pensions that you have in place, it’s important to consider the income that you’ll need in retirement and the way that we would advise you to do this is by analysing it via an income vs expenditure worksheet.
5. Will you have any major expenditure plans?
When you retire, it’s often the case that individuals will consider spending large amounts of their pension they’ve accumulated. This may be on a planned holiday of a lifetime to celebrate your retirement, maybe to reduce outstanding mortgage debt or maybe to build a house extension, for example, or it could be that you’re simply looking to give some money to your family.
6. Knowing your options at retirement
After considering what pension pots you have and the income & expenditure you may need, it’s really important to understand the options that your pensions provide. This may be purchasing an annuity, which is an income for life or drawing down on your pensions in a flexible way.
7. Consider your appetite for investment risk
When approaching retirement, it’s important to consider your appetite to investment risk. Depending on the result and outcome of your feelings, this may have an influence on the income options you have in retirement.
8. Consider other investments you may have
So you’ve considered the fact that you may be entitled to a state pension and considered all of your other pension pots that can create an income in retirement. However, it may be the case where you have other assets that can produce an income for you, such as a rental property or any other types of savings and investments.
9. Think about your death benefits
So with your overall planning for your future retirement, it’s important that you review all of your pension plans in place and consider your future income options, and nominate your beneficiaries. This will ensure that in the event of death, money will pass on to your loved ones or those that you want to receive it.
10. How can I improve or help my position?
So having reviewed your overall pension position for consideration of your retirement, if you feel that you’re not where you need to be, there are a few easy steps that you can take to improve your current position.
First, you could consider increasing your pension contributions. Second, you could look at the funds you’re invested in and whether they’re appropriate or not. And thirdly, you could review your existing pension plans that you have in place to ensure that they are doing what they need to, and whether or not they may be better placed elsewhere.
Hopefully, you’ve been able to take some helpful information away from this article. If you’d like further guidance on it, please contact us via the form below and a member of our team will get in touch with you soon.