Retirement planning does not have be strenuous and the source of worry. Following our 8 step checklist will help you on your way to a simple retirement.
Whatever stage you are at, from starting your first job with years ahead of you prior to retirement. Or only a few short years away from leaving your trade ready to retire. There are a number of steps of retirement planning you can take to ensure the most stress-free retirement possible for you.
Now is the time to be thinking forward and planning ahead. The decisions you make now could shape your retirement and affect your retirement income. With considerations to be made to your current financial situation, right through to what you hope your future financial situation will be. We have created an 8 step checklist to a simple retirement.
For those who are still significantly further away from retirement, yet still to wish to plan ahead, we would recommend you read our article on Forward planning for young people: Retirement. However, it is still worth reading ahead so you know what considerations you will need to make when the time comes.
- Know when will you receive your retirement income.
Knowing the date you start to receive retirement income is essential for your retirement planning. The date you receive your company pension and personal pension could potentially be different to when you receive your state pension. Ensure this date is factored in to any planning.
- Establish what your retirement requirements should be.
By looking in to your current spending, financial commitments and what payments will continue to be the same as you enter retirement. This could include rent, utilities, insurances amongst other financial commitments. This will help you establish your minimum retirement budget.
- Establish what your retirement income could be.
Your retirement income is likely to be made up of pensions you have contributed to. This may be formed as part of a company pension scheme or personal pensions. You should have received annual statements which will forecast the pension you will be entitled to. You can also check your State Pension entitlement via GOV.UK. If you have made the relevant National Insurance contributions throughout your life, then you should receive all or part of the full allowance for your state pension.
- Calculate if your income covers your requirements.
Once you have established your minimum retirement budget and what your retirement income will be, you will know whether your retirement income will cover your costs. Ideally, this will be the case, but if it isn’t, there are options to help you achieve this.
- Look in to boosting your pension.
There are 2 options to boost your pension income. Delay retirement until you have made the relevant contributions towards your pension. Or increase your current pension contributions. Which of these options will be most suitable to you will be based on your personal circumstances.
- Consider investment risks.
As you reach retirement age, it may be tempting to take advantage of higher risk investment strategies for your pension. Higher risk strategies often promise higher returns. If you are looking to boost your pension, this could seem tempting. Before going ahead with any investment strategy, it is essential you consider and understand the risks involved.
- Establish what debts you may have.
Debt is not always a bad thing. If you have a clear strategy in place to manage it as part of your retirement planning, debt is completely manageable. When undertaking retirement planning, consider the debt you have and how long it will take to reduce. Considerations such as this may prompt a slight date change to retirement. Pension Freedoms now allow for accessing your pension at 55 and taking an amount of tax free cash which could help in certain circumstances.
- Recognise if you would benefit from Financial Advice.
We hope we have simplified retirement planning for you, however there are many that would benefit from taking advice from an Independent Financial Adviser. The purpose of a financial adviser is to provide a professional service to all individuals to reduce any apprehension retirement planning could raise. Additionally, allowing individuals to have more time to spend on the things they enjoy in life.
The Harvest Partnership Ltd are available to discuss your retirement planning, from the first steps of pension advice to managing existing pensions that you have in place. Visit our Contact Us page today.