Your guide to successfully planning your retirement

Throughout your whole life, you’ve probably thought about your next steps, probably revolving largely around your career, and your desire to progress and climb the ladder. However, you might not have thought about the step from your career into retirement, but trust us, it’s one of the most significant steps that you will take in your life, so you’re going to want to plan it carefully. ‘But why do I need to plan my retirement?’, you might ask. Well, we’re here to answer just that and to guide you through how you can successfully plan your own retirement.

Why is a retirement plan important?

The amount of money that you receive when you retire is largely determined by the decisions you make, and the steps that you take in preparation for this milestone. At present, you probably have a reliable source of income, however, this is not guaranteed when you retire. The State Pension requirements changed in April 2010, meaning that you now have to wait longer to receive it. The State Pension age also rose for both men and women, meaning that the average person would have to work until they reached the age of 68 before they received their pension from the state.

Because of this, it is risky to rely upon your State Pension alone as an income for your retirement and you should consider taking some proactive steps towards planning your retirement early, so that you can sit back and relax when the time comes for you to stop working.

Figure out what your retirement income is likely to be

Your pension is like a piggy bank that is steadily filled throughout your working life. Much like a piggy bank, you’re unlikely to know the contents of your pension until you open it up to take a look. You can do this by applying for a State Pension statement, which is the estimated sum of money that you are likely to receive once you retire. This value is based upon your National Insurance contributions throughout your life, and to find out how much you are likely to receive and when you might receive it, you can consult the GOV.UK website.

Of course, your income once you retire does not solely rely upon what you receive from the state, since you may have your own investments and savings that you have accumulated over the years. Making smart financial investments in life can provide you with an extra pot of money that you can dip into when you retire, to do those things that you’ve always wanted to do, but never quite got round to.

Have a good understanding of your spending habits

By assessing your expenditure year on year, you will begin to acquire a pretty comprehensive idea of how much income you will need when you retire, so that you can plan accordingly. Granted, your life may be different when you retire and you may not have financial commitments like a mortgage or children to worry about, but it’s important to take into account the fact that your pension income is unlikely to match your current wage. You can easily track your spending on an online banking app, where you can assess your monthly and yearly spending history, to give you an overview of your overall habits.

Consult a financial advisor

To help you with your financial planning for your retirement, you may want to seek the help and advice of a financial advisor. An advisor will take your financial situation into consideration and also consider different scenarios that could potentially affect your income when you retire. Financial advisors can help you to make wise investment decisions, to make the most of your capital and to set you up with a comfortable retirement fund. A financial advisor can form an investment portfolio that is tailored to your risk preferences and is suited to the lifestyle that you wish to lead when the time comes to finish work.

An advisor can also help by providing you with advice in regards to tax regulations, which will enable you to take full advantage of your allowances.

Your retirement will come around before you know it, so it’s important that you don’t postpone thinking about it and start formulating an action plan today. By assessing your spending habits and seeking out a state pension estimation, you can figure out the funds that you will require to receive the retirement that you deserve.