Retirement is an exciting prospect, albeit a distant one for many of the UK’s working population. Distant as it may be for most, it is nonetheless a crucial part of life to plan for – and the sooner you plan, the better a retirement you can look forward to. But what are some of the key considerations for preparing your retirement plans?
The Importance of Preparation
Before we get into the nitty-gritty of what preparing for retirement looks like, it is first important to state exactly how important good preparation is. There are obvious arguments for setting out serious plans for your post-work life, personal enjoyment chief amongst them; if you get all the worrying out of the way now, you can enjoy as stress-free a retirement as possible the moment you leave the workforce.
There are, however, other logistical reasons that make advance preparation especially important. The financial benefits to organising your retirement pot in advance are incredible, with even a handful of years making a huge difference to the shape of your post-work situation. In discussing the various aspects of retirement planning, we’ll encounter these reasons more directly.
Financial Preparations
The financial aspect of retirement planning is its backbone; without proper consideration here, even your most basic wants and needs for retirement life may not be possible. The key mechanism for any retirement income is your pension, into which you will already be opted thanks to the UK’s opt-out regulations. Paying more into your pension can result in better returns for you after retirement, due to the tax relief you receive on pension-saved money. The earlier you start, the more relief you receive and the bigger your payout.
You will also want to be debt-free by retirement, in order to completely minimise unnecessary financial outgoings. With no debt obligations or interest-heavy repayments on your balance, only the bare essentials of food and utilities will weigh down your pension income.
Life Insurance
An often-overlooked part of retirement planning is the topic the life insurance. Life insurance is often only considered simultaneously to taking out a mortgage, so it may be that you haven’t given life insurance any thought since your first plan – if at all. As you approach retirement, revisiting this topic is essential, and especially so if you still have dependants or outstanding debts (mortgages included). Over-50 life insurance policies require no medical checks, and as such are forgiving; you can insure yourself and protect your loved ones in the event of a sudden or unexpected medical event.
Life Planning
The final piece of the puzzle is, of course, the way in which you’d like to live out your retirement. With a bigger financial pot to enjoy, you’ll be able to give more time to enjoyable pursuits and bucket-list activities – particularly those globe-trotting holiday plans!
