Planning for life after retirement is essential if you want to ensure that you will be able to live comfortably once you leave work. It’s tempting in our younger years to leave this until we’re older but the truth is, the earlier you start, the better prepared you’ll be:
The first step is to work out how much you will need per month to live comfortably after retirement. Considering that most forms of debt (loans, mortgages etc.) should leave be repaid before you leave work, this will depend on the type of lifestyle you wish to lead upon retirement and can vary greatly from person to person.
There are many ways that you can save money for your retirement, but most people choose either a conventional pension plan, an investment portfolio, or to save privately. Many people use a combination of these methods. We recommend speaking to an independent financial advisor and discussing your options with them since there is always an element of risk associated with investing in any form of financial product.
Employers are now required to offer a workplace pension, which is worth considering as many employers will make a monthly contribution to the pension plan on top of your own. Your employer will be able to provide you with information on the pension plan(s) they offer. It is also possible to purchase your own pension plan, where you will have the choice of thousands of available products, but may not receive a contribution from your employer. Again, we recommend discussing your options with a financial advisor.
It is now easier than ever to enter the stock market, and with the right knowledge, it is possible to successfully raise capital at a rate far better than an average financial product. However, it is also possible to lose money and the element of risk will depend on many factors such as the product your trading, the number of options you own, and the predicted volatility of the market. Many people are wary of investing in this way as it can be rather complicated, but a professional will be able to help you when considering your options.
There are other forms of investment too, such as investing in property for rental income, all with varying levels of risk and potential reward. It is worth discussing your plans with a financial advisor to ensure that you understand the risks and make the best decisions for your future.
Most people will have some form of private savings by the time they reach retirement age. It is possible to save for retirement using private savings entirely, however, this may not be the most effective way to prepare, and could see you lose potential earnings through interest. Many people prefer to have a conventional retirement product and keep private savings for emergencies or to pass on to loved ones as an inheritance.
Equity release (now commonly known as a lifetime mortgage) is one way to raise capital after you retire. If you own your home, it is likely that its value will have increased by the time you retire. A lifetime pass mortgage allows you to release some of that profit, pay no monthly instalments, and settle the loan after you away. An independent mortgage advisor will be able to provide you with information on the thousands of available products, should you want to consider this further.
If you would like to chat with an expert about planning for your retirement, feel free to contact us directly. You can pop into our offices in Preston, Southport or Garstang, or find our contact details here.