Having enough money to live off in your retirement is vital; this is why it is important to start retirement planning as soon as possible. While you are just starting out in work it might seem like an expense that you could do without. However, the sooner you start saving the more you will have when you come to retire.
Retirement planning rule changes
It is fantastic news that the government changed the rules about having to purchase an annuity. It gives a person more control over where their retirement fund goes.
However, this isn’t to say that an annuity isn’t right for you, there are some great deals available but before you hand over any cash, get advice from an independent financial advisor as to the right option for your circumstances.
Retirement planning is important but putting money into the bank isn’t your only option for retirement. It is possible to make money on the rental market, buying properties and renting them out. This option is good as long as you are buying the right properties and you are not paying out more money than you are making.
It is possible to make money with a retirement portfolio and claiming the rent for properties, but if you need to do a lot of maintenance and need to borrow against any properties that you might have, then retirement properties mightn’t be the right option for you.
Budgeting for retirement planning
Retirement planning is easier when you consider your budget; there are items that need removing before retirement, including a mortgage. It is difficult to secure a mortgage into you retirement because it is a large expense and if your retirement income is reliant on a smaller income then paying a mortgage is difficult.
In addition, life insurance is questionable as to being a need once you hit retirement, if you have enough savings to pay for funeral expenses then having a life insurance policy might be an expense you no longer need.
With a reduction in the amount of money going out, this can coincide with a reduction in the income into the home. It is important to know how much money you will need because this is going to indicate the level of income you need and when you are able to give up work.
It is possible to continue working into retirement, it doesn’t mean staying in the same career or even working full-time, but supplementing your retirement income with a job might be your only option.
Working in retirement is becoming an acceptable option; an employer can’t ask you to leave if you are still able to do your job. Laws and regulations are changing and having money to live comfortably in your retirement might require a longer working life.
Working in retirement is a great way to meet people, dropping out of the job market reduces your acquaintances and whilst you might have loads of jobs to do around the house, loneliness can quickly turn to depression, having something to occupy some of your time might help with the adjustment to retirement.
Take action sooner
The sooner that you take action and start your retirement planning the more money you will have for your retirement. A pension scheme is an option that you should consider. With the removal of having to buy an annuity, it means you can save for your future knowing the government is adding money to your savings too.
The main disadvantage is the age at which you can get access, it will depend on the policy, but you won’t be able to remove money until you hit a certain age deemed by the company underwriting the policy.
Therefore, while retirement might be further off for some people, it is important that you start considering how to finance your retirement as a state pension isn’t going to be adequate in the near future.