Many people dream of their retirement years. Being able to be completely free to decide how you spend your days sounds ideal. Retirement can be an expensive time so you will need to be financially savvy. There are lots of things to consider, such as your future healthcare needs, any home improvements you’ll want to make, and any travel plans you want to make.
Here are some ways to plan for your retirement without creating financial strain in the present.
Start early with savings
It is never too early to start saving for your retirement. The simplest way to do this is to set up a separate account specifically for your retirement. Set up a recurring direct debit from your main account to your savings account to automatically transfer a set amount each month.
By saving a small amount each month, you will find your next egg grows rapidly. For example, putting £100 per month leads to £1200 for one year. If you were to do this for your entire working life, you would have a nice sum waiting for you.
Maximise retirement accounts
When it comes to bank accounts, the market is full of different choices to suit your needs. Retirement accounts have the same variety.
Private pensions are a great alternative to a regular savings account as you can get some tax relief on payments into it. As pensions are designed to be locked away, you will not be able to access them until you turn 55, giving you peace of mind that you won’t spend it early.
Consider equity release
If you are a homeowner who is 55 or older, you may want to consider equity release. This process unlocks some of the tax-free cash that is locked away in your home.
There are different ways to release equity, and each comes with different benefits. Lifetime mortgages, for example, help you to retain ownership of your home and some give you the option of flexible circumstances. But there is then a loan secured against your home.
Take some time to consider if equity release is right for you before committing and signing the loan agreement.
Review and adjust regularly
A retirement plan isn’t set in stone and can be adjusted as your career and needs change. If you are in a tough spot financially, pause your direct debit to your savings account. As long as you pick it back up when you can, it will be fine.
Don’t cause yourself financial stress in the present day by worrying too much about the future. It is prudent to plan but not at the expense of enjoying yourself and doing things you want to do.
