Are you finishing work soon? Here are 6 top tips for your retirement planning.
You might think that having a pension means you are financially prepared for retirement. However, properly planning your retirement involves more components than a pension plan, you should consider taking on expert advice from a specialist such as Portafina.
Fortunately, when it comes to your retirement preparations, you can exercise some creativity. Here are six top tips for your retirement planning to get you started.
Preparing for your retirement
Regardless of your retirement being imminent or some time off, you can benefit from this knowledge. Therefore, here are six tips for your retirement planning.
Clear your debts
Paying off your financial obligations and becoming debt-free should be your number one priority. It’s never a good time to accumulate debt, especially when you are planning for retirement.
The sooner you can clear your debts, the more time you will have to build up a comfortable retirement fund. When paying off your debts, you should start with those with the highest interest rates. Doing so means you’ll have more income available to pay off your lower interest debts more quickly.
Clear your mortgage
Of course, your mortgage is still classed as a debt, but you can treat it differently from other consumer debts such as credit cards, car loans, etc. However, it is still an excellent idea to get your mortgage cleared as soon as possible.
Owning your home outright does not only provide you with a physical roof over your head; it also provides you with peace of mind for when you retire. Moreover, having no mortgage when you retire means you’ll effectively be living rent-free, relieving you of a significant financial burden.
When you have your debts and mortgage taken care of, you can start to think about using your money more positively. Consider making some investments or reviewing those which you already have.
If you are close to retirement, you may already have several investments in place. These can include all or some of the following:
- Stocks and shares.
- Regular savings such as ISAs.
- Personal or workplace pensions.
- National insurance contributions towards your State Pension.
If you have some of these in place, that is excellent. However, some time may have elapsed since you initiated these investments, so checking on how they are doing is essential.
Develop a financial plan
Developing a sound financial plan will bring these retirement planning tips together. Start by recording your expenses and creating a realistic budget based on your spending and income. Doing so will enable you to maintain your lifestyle, avoid further debt, and inform you of how you need your investments to perform.
When creating your budget, you must be honest and include all your spending. For instance, if you can’t go without a holiday, you must budget an amount for this every month. A realistic budget will help you plan your retirement and help you achieve the lifestyle you desire.
Continue working part-time
Many people approach retirement excited at the prospect of ending their working years. However, the reality of ceasing work entirely can be challenging for some. Therefore, they continue to work part-time into their retirement.
As well as providing you with valuable activities and boosting your income, working part-time allows you to try something new. You may want to try making some money from your hobby or start something you’ve always wanted to do but never had the time.
Get mentally prepared
Despite significant planning and preparation for your retirement, you will experience a different pace of life. Therefore, you must get mentally prepared for this.
You cannot know precisely how you will feel in retirement. However, change is inevitable, so you can be sure you will feel something different. If you accept these changes rather than resist them, your retirement will be more enjoyable.
Work through the challenges these changes present you, and perhaps discover new and beautiful things about yourself. Retirement can be a significant phase of your life, and you have a lifetime of knowledge and experience to make a positive impact on the world.