Life after work – Preparing for retirement

Getting the most from your retirement requires careful planning, both in terms of what you will do with your time, as well as how you will afford it. It is a complete change of lifestyle which some take to easily, but for others it is a harder adjustment. Holidays may give you a taste of having more free time, but why not use them as an opportunity to really think about structuring the years ahead?

How can I prepare for a comfortable retirement?

Preparing for retirement should start when you start working. With auto-enrolment into workplace pensions now standard, more of the working population have a pension. But that will not necessarily be enough to fund your retirement and shouldn’t stop you looking at other ways of saving and seeking out the most tax-efficient ways of accumulating wealth. 

As you go through your working life your financial goals change, as does your discretionary income and a priority should be to start a financial plan that lists your assets such as pensions (state and private), ISAS, savings and property and predicts how much income they will provide for your retirement. This can be complex and it is becoming usual to enlist the help of a financial adviser who will work with you over a number of years to help you plan and come up with solutions to ensure you receive your full potential retirement income.

How will I spend my time?

As well as planning your finances, think about how you want to spend your time. After a busy career, free time can be daunting for some people, so think about hobbies you might want to pursue. Remember that you will need to maintain social contact and keep up with new technologies and a new circle of friends with similar lifestyles to yours can help with both these things. You may plan to explore a new environment by moving house or travelling. Don’t let the sudden change come as a shock – retirement can be emotionally upsetting and needs as much thought as your finances.

Can I afford to do the things I have always dreamt of?

It is one thing to decide when you want to retire and what you want to do, another to be able to afford it. A financial adviser can help you work out if the two are compatible. If you find there is a shortfall when you compare your expected income against expenses, there are some options available to you. You may choose to work longer – retiring later means that your pension pot won’t need to last so long and you may get higher monthly payments. Take a look at all your monthly expenses and cull any unnecessary subscriptions and memberships.  

You might want to look at other ways of organising your retirement income. Since 2015 there has been greater freedom in how you can take your pension funds, including as a lump sum.  This might suit a specific retirement goal, but must not be done without first taking financial advice and you should be very careful of scams which offer unsolicited advice on how to invest your money. 

There are many ways to structure your retirement income and it is never too soon to start planning it. Important Information: A Pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation.