6 Tips To Help Your Retirement Goals
Please note this blog post was published over 12 months ago and so may not include the most up-to-date information, for example where regulation around investing has changed.
Are you giving enough thought to your retirement? No matter how young or old you are, it is important to thoroughly consider how you will manage after retiring. The following tips could help you enjoy a more comfortable retired lifestyle.
1. Plan Early
The earlier you start planning, the better.
With people living longer, potentially twenty or more years after retiring, there’s a need for more money. The more you can put away, at the earliest opportunity, is ultimately going to be to your advantage.
2. Set A Goal
Once you have planned to save and invest, you then need to set your goal. What age do you want to retire at? How much money do you want to live on each year?
Once you have established these goals, you can determine how much you’ll have to save or invest each month to get there. Our own research suggested a 35 year old starting to save for a pension now would need to save £52 per a day in order to retire at 60 with an income of £23,457.
3. Be Realistic
People are going to live longer in the future, and you’re likely going to need more money than you realise. If you’re realistic with how expensive retirement could be, then you’re more likely to stay focused in saving towards your goal.
However, keep in mind your other assets, such as your house. If you’ve paid off your mortgage by retirement, that’s going to be an expense gone.
4. Consider A Personal Pension
A personal pension plan allows you to invest up to 100% of your income or £40,000 in this tax year (whichever is lower). It is a tax-efficient investment scheme to build an income in retirement, you won’t pay tax on any income or capital gains. If you’re a basic rate taxpayer, you’ll get a 20% tax rebate, so for every £800 you invest, the actual amount invested is £1,000, as £200 of tax relief will be reclaimed from HMRC on your behalf.
On reaching retirement age, you can withdraw your private pension in a lump sum, or take an income over time. The age at which you can cash in your pension is currently 55, this will rise to 57 in 2028 and then track 10 years below the state pension age.
5. Consider A Stocks & Shares ISA
A Stocks & Shares ISA is another tax-efficient investment scheme. It allows you to invest up to £20,000 in this tax year. It could give you greater growth than a Cash ISA.
If you continue to invest in your ISA in this way towards retirement, then you could build up a nice sum to retire with.
6. Think Long Term
Using long term thinking is key to retirement planning. You have to be prepared to part with your money now, in order to benefit from it at a later date. Failure to think long term could result in having to work later in life, or having to settle for a less comfortable lifestyle after retiring. To minimise any savings gap, the time to start thinking about retirement is now.