5 Top tips when considering retiring
A lot of people spend their working life saving for one thing or another. Whether that’s a new car, a holiday or retirement.the point being we spend our time saving for something that will happen in the future with a view of spending that money and then saving again for the next big thing.
For those people who retire and stop work completely it can be a struggle to come to terms with a shift in behaviours. You’re no longer working and no longer earning money to save. Instead, you find yourself living off your savings, pensions and other assets and possibly seeing them decrease over time. For a lot of people this can seem daunting as they’ve spent their life accumulating money and then all of a sudden, the opposite is happening, they’re spending / decumulating their money which is a big shift that some people struggle to become comfortable with, and this is entirely natural as you of course don’t want to run out of money. Planning your retirement can help alleviate some of this stress as you are starting to take a little more control over the situation. Helping people plan for retirement is something we do most days here at Brian Mole IFA and here are some top tips for you to consider if you’re thinking of retiring.
Tip 1 - When do you want to retire? Possibly the most important thing is to set a date in your mind, of course this can be flexible but this is important because it gives you something to aim for and to plan around.
Tip 2 - How do you want to retire?
Do you want to fully retire, go part time, perhaps volunteer.yet another important factor to consider because this will impact on whether or not you still have some form of income coming into the household and what this will look like.
Tip 3 - Do you know your entitlement to state pension?
A vital income source in retirement is your state pension, knowing how much you’ll get in advance is crucial to planning a successful retirement, you can find out for free on the government website or by completing a BR19 form, both can be found here - https://www.gov.uk/check-state-pension
Tip 4 - What do you want to do in retirement?
Thinking about this and understanding how your lifestyle will change is key because this will ultimately impact and change your spending habits. A useful thing to do is to think about the type of life you want to live and try to estimate how much you’re likely to spend. Also it’s important to think about any “bucket list dreams” you may want to do, such as a cruise or even an African Safari!
A basic way of doing this would be to complete a budget planner of your monthly outgoings and then think how these will change in retirement. Will you no longer have a mortgage? Will your costs for holidays increase? Will your costs for eating out increase? Will you change to having only 1 car instead of 2? Will you move home? These are important aspects so you can understand what a typical month may look like from an expenditure point of view.
Tip 5 - What assets have you got to fund your retirement?
This is where you start to gather information about what pensions, savings, investments and other assets you have to fund your retirement and start to plan if this fits in with your new retirement lifestyle. These are a few basics to consider, but it’s vitally important to factor in the ever increasing cost of living through inflation, along with any assumed growth rates of your pensions investments and savings. Along with stress testing this to see what would happen in a market crash and to see how long your money would last. This can seem daunting because you’ve not done it before and you don’t want to get it wrong.this is why we offer free initial appointments with no obligation so we can have an initial conversation with you about your retirement plans and we can help you develop a bespoke plan through the use of sophisticated modelling software.