Retirement planning requires delving into your finances. Although this may seem daunting, getting things in order today could eradicate future money concerns. Therefore, here are five steps to creating a successful retirement plan. Planning for the long-term future is important; when considering your pension, take on advice from a specialist such as Portafina.
5 Steps to Creating a Successful Retirement Plan
1. Get control of your finances
If you are concerned you might not have sufficient money in retirement, now is the time to get your spending in order. The best way to do this is to create a budget and stick to it.
Plenty of budgeting apps and other money management tools are available to help you with this. With some willpower and discipline, you’ll have additional money at the end of the month that you can put into your pension pot.
2. Work out your potential retirement income
Pensions are likely to make up a considerable proportion of your retirement income. The good news is that you could have several of these, some of which you may not know.
If you’ve changed employers throughout your working life, you could have as many workplace pensions. These can be easy to lose track of once you stop contributing to them.
However, even if they contain a small amount, those funds are rightfully yours. Therefore, you should endeavour to track them down. You can do this using the pension tracing service on the GOV.uk website.
While on that site, you should also check your State Pension forecast. Although it is not likely to be your primary source of retirement income, the State Pension is an excellent supplement.
You could have other forms of retirement income such as commercial property, investments, buying and selling shares or other assets. It is crucial to consider the tax implications of your retirement income, regardless of its source.
3. Think of yourself a bit more
Helping out family members is a beautiful thing to do. However, if it affects your financial security in retirement, you should consider whether it is the right thing.
Consider thinking of yourself a bit more regarding your retirement plans. After all, the more financially secure you are, the more help you can give your family.
4. Visualise your retirement
Build a picture of how you want your retirement to be. It may be challenging to understand precisely how much money this lifestyle will cost. However, as a general rule of thumb, your pension pot should be as large as possible!
Therefore, you should maximise its growth at every opportunity. For instance, consider making regular top-up payments to your pension. Also, frequently review your pensions to see how it performs and ensure management charges are not too high.
5. Understand your pension options
Chances are, you will have various options for accessing your pension funds. For instance, from age 55, you could take 25% of your pension pot as a tax-free cash lump sum. However, doing so could leave you short of income later in your retirement. A regulated financial advisor can discuss your options and help you make the best decision.
