RETIREMENT PLANNING

Set Clear Retirement Goals

Decide When to Retire: Think about when you'd like to retire. The State Pension age in the UK is gradually rising, so be aware of when you’ll be eligible to start receiving it. Have you amended your Workplace Pension to your desired retirement age?

Estimate Retirement Costs: Work out what your lifestyle in retirement will cost. Consider housing, food, travel, hobbies, and healthcare. Don’t forget inflation, which can erode your purchasing power over time.

Think About Life Expectancy: People are living longer, so plan for a retirement that could last 25–30 years or more.

Eliminate Debt Before Retirement

Ideally, you should aim to be debt-free by the time you retire. Focus on paying off high-interest debt, such as credit cards or loans. If you still have a mortgage, consider how you’ll manage this once you stop working. Some people aim to pay off their mortgage before retiring, while others may choose to downsize or move to a smaller property.

Review Your Estate Planning

Wills and Inheritance: Make sure your will is up-to-date, especially if you’ve had major life changes like marriage, children, or the purchase of a property. Additionally, you need to take into account the implications of inheritance tax.

Powers of Attorney: You may also want to consider setting up a lasting power of attorney (LPA) to allow someone you trust to make decisions on your behalf if you become unable to manage your affairs.

Beneficiary Designations: Ensure that your pension scheme or other financial accounts have up-to-date beneficiary designations so that your assets go to the right people when you pass away.

Plan for Healthcare and Long-term Care Costs

In the UK, healthcare through the NHS is free at the point of use, but there may still be costs associated with dental care, prescriptions, or long-term care in later life.

Understand How Much You Need to Retire

Retirement Income Goals: Think about how much money you will need to cover your lifestyle in retirement. This includes your pension, savings, and any other income you may receive (like rental income or investments).

Income from Pensions and Savings: The income you receive in retirement may come from a combination of the State Pension, personal pensions, and any savings or investments you’ve built up. You’ll need to plan how to draw on these resources to meet your income needs.

Withdrawals from Savings: It’s important to plan how you’ll draw down your savings. A commonly recommended rule is to take 4% of your retirement savings per year, but this can vary depending on your circumstances and the performance of the markets.

Stay Flexible and Review Your Plan Regularly

Your retirement plan should be a living document. Review it regularly to make sure it’s still aligned with your goals, particularly as you approach retirement age. Adjustments may be needed due to changes in your financial situation, market conditions, or lifestyle choices.

Know When to Claim Your State Pension

The age at which you can claim your State Pension depends on your date of birth. You can check your State Pension age on the UK government’s website. You can choose to defer your State Pension to receive a higher amount later, but it’s important to know when you’re eligible and what will be most beneficial for you financially.