There’s no doubt that the state pension fund in the UK has been stretched in recent times on the back of economic hardship and rising life expectancy. The latter point is particularly important, with one in six of us now likely to reach 100 and the majority of the population expected to spend a third of their lives in retirement.
This is why individuals must take responsibility for their own financial future, as they look to build private pension funds that can give them the retirement they want.
This is just one of the steps required to prepare for retirement and below we’ll offer a brief insight into how to ready yourself for life after work.
- Define your Retirement
This is perhaps the most important step, as it’s impossible to plan in detail for retirement if you do not know what this entails. Even on a fundamental level, making the transition from full-time work to retirement can be difficult, particularly if you have no idea about how you want to spend your time.
By defining your retirement, you can create a list of goals and objectives that you would like to realise. You can then determine how much money you’ll need to achieve these aims, helping you to prioritise your activities and create a viable spending plan.
This will help you to visualise a realistic retirement plan without necessarily compromising on your goals or how you spend your time.
- Take Stock of your Assets
We touched earlier on the importance of optimising your personal wealth and seeking out private pension plans that can fund your retirement.
It’s also imperative that you take stock of these assets prior to your retirement, however, while also creating a simple plan for managing and organising your wealth.
This is particularly challenging if you have a number of private or workplace pension schemes in your name as it can be difficult to track these and assess their value. For some people it may therefore make sense to consolidate your existing pension plans into a single account that you can access as and when required.
Firms such as Bestinvest can help you in this endeavour as they can transfer your funds into a single pension plan and cover some of the costs associated with this practice.
- Create a Retirement Budget
On a more practical side, you’ll also need to create a detailed retirement budget that will outline your pension income (state and private), your remaining debts and your potential spend.
This will include the expenses that you have already outlined as part of your goals, as you look to achieve your goals without spending outside of your means.
We’d recommend budgeting ahead of time where possible by utilising estimated figures before finalising more exact numbers as you track your finances during the first few months of your retirement.
This will help you to create a viable spending plan for your retirement, while also allowing you to schedule your activities to suit your budget.