You may be looking forward to retirement – and rightly so. After working hard for so long, you deserve to sit back and enjoy your golden years. Yet if you want financial freedom after you retire, you must take steps to get your finances in order.
At the time of writing, the most you’ll get in your state pension is £155.65 a week. This is unlikely to be enough to give you a comfortable lifestyle when you stop working. Here are some tips to help you get your finances in order as you get older:
As with any new stage in life, planning is crucial. It may seem strange not having to work anymore. Yet devising a plan will help ease the move into retirement. This will certainly take a bit of effort and commitment, but it’ll be worth it!
Work out how much money you'll receive from your savings and investments, as well as your workplace pension.
A Telegraph article from 2015 says that many pensioners need as little as 50% of their final salary to live in comfort for the rest of their lives. It goes on to say that this is partly because many have already paid off their mortgage. Yet this is not the case for everyone. In fact, as the Open Property Group ‘Road to Retirement’ infographic shows, those aged 70-74 are supporting the highest mortgage repayments at £710 per month.
With all of this in mind, take care to itemise each piece of expenditure you expect to face after you retire. Include bills that occur monthly, quarterly and yearly. Add 10-15% to the total figure just to cover any unexpected bills you have to pay. Once you have a sense of what you will need to live in comfort, use this fantastic retirement calculator from Age UK to work out how much you have to save per year until you finish work.
To get the highest state pension, it’s important to ensure there are no gaps in your National Insurance payments. If you lose your job, or become too ill to work, you can claim National Insurance credits.
As the aforementioned infographic states, another way to boost your retirement income is to defer your state pension. If you wish to carry on working part-time after retirement age, this will allow you to grow your pension pot until you are ready to take it.
If you’re about to retire, you may need to update your will. This ensures your loved ones get their inheritance. It also gives you a way to make sure your estate is distributed in the way you wish. By contrast, if you die without making a will, this could create a heavy burden for your family. This may involve probate and other lengthy – not to mention costly - legal and administrative battles and costs.