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Retirement planning can be a stressful undertaking for even the most prepared of people. The recent cost-of-living crisis, and the near-miss that UK pensioners experienced with regard to the triple-lock, has thrown into sharp relief the importance of shrewd financial planning when it comes to later life. What should you bear in mind while planning for your future after work?
Personal Finance Planning for Retirement
Pension
Your retirement planning should always start with understanding your pension. Your pension plan is central to your retirement income, being one of the most powerful ways to invest in your future. What is the current value of your pension plan, and how much are you paying into it each month? How much is your employer matching?
Knowing this, and knowing your salary trajectory for the next five or ten years, can give you enough information to address how much you are paying in. The more you pay in now, the more you’ll benefit from compound interest, and the higher your pension kitty will be when you reach retirement age.
Your Retirement Budget
Of course, the above decision can only be truly made when you have a more solid understanding of your long-term financial aims. What will your budget be for retirement? How much will you need per month to maintain your ideal standard of living?
This budget goes both ways; you may be able to make some savings adjustments now that guarantee a larger budget later on, but you may also need to moderate your expectations. Still, there are numerous routes outside of your pension to take into consideration.
Income and Finance
For example, there are finance routes that you may be able to make use of in your retirement to minimise the burden of inflation – or to enable you to afford larger bulk purchases. If you own property, you could use an equity release calculator to find out how much equity you could release from your home as part of a lifetime mortgage.
In owning property, you might also be able to generate some semi-passive income through renting. This might either be to long-term tenants or as a holiday let on an online platform. Either way, the additional income you could generate could be impactful for the size of your retirement budget.
Savings and Investments
Owning commercial property is an investment in and of itself, and the movements of the property market could net you serious gains through selling up and downsizing. Your actions at a younger age could also give you an advantage here if you invest money in a global tracker fund alongside contributing to your pension. Using the global economy as a growth vehicle can be highly beneficial to your retirement finances, especially if done through a stocks and shares ISA that grants tax exemption on gains.
