Preparing for retirement can be a scary and daunting time for anyone. The idea of not going to work every day and, more importantly, the resulting reduction in your income can be a cause for concern. As a result, it’s natural to block out any thoughts about retirement until the day is suddenly upon you and you find yourself with few financial plans in place. However, it pays to be prepared.
Several years before you stop working, you should start actively planning your retirement. This can be done in several different ways.
Work out what money you are likely to have. Calculate your pension (both private and state), benefits, savings and investments to establish what free income you will have on a regular basis.
Plan your retirement income. Use a budget calculator to consider your current income and expenditure and compare this with your proposed income after retirement. This will allow you to understand the financial implications and what cuts you will need to make in order to live comfortably.
Clear your debts. Many people enter retirement with ongoing high interest payments which eat into an already reduced income. Several years before retirement, analyse your debts, establish the ones with the highest interest and try clear your feet early.
Importantly, you should get advice now. To better understand the bigger picture, including entitlements, pensions and your wider post-retirement finances, talk to your local money adviser who can help you finalise the best options for you now and in the future.
The following organisations also provide advice: