How do I save for my retirement?
Planning for retirement is a process that will look a little different from person to person. In general, the idea is to set in place streams of income that are adequate, not only to meet your day-to-day living costs, but that will also allow you to enjoy those well earned luxuries in life.
What questions should I ask myself when planning for my retirement?
Here are a few questions you should ask yourself when planning for your retirement:
- At what age would I like to retire?
- Roughly, how long am I likely to live after I retire?
- What is my health likely to be like during my retirement years?
- How will the cost of living have changed by the time I retire?
- How much money do I need a month/year to maintain my desired lifestyle?
- What income streams do I already have in place for my retirement?
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Of course, most of us will be unable to have a clear and definite answer for each of the above questions, but just thinking about potential answers can help when you are planning for your future. It is also advisable to seek guidance from a professional financial advisor when planning for your retirement. They will be able to help you build a plan that provides you with financial security.
What are the potential sources of retirement income?
Your retirement plan should definitely not be based on buying a winning lottery ticket or unearthing a valuable coin! Here are some practical ways to prepare for your financial needs during retirement years:
Many employers also offer work-place pension plans. Alternatively, individuals can purchase private pension plans themselves. These secondary pensions are highly recommended, as they will provide a significant financial boost to those in retirement. The tax relief offered on contributions to pension funds is also a benefit that you should consider. Additionally, the money in a private pension grows tax-free.
For most of us, the years spent in the workforce have allowed us to accumulate a pension upon which we can draw for retirement. State pension plans were never intended to be the sole form of provision for retirees however. The current maximum state pension is £119.30 per week (correct as at the 12th May 2016).
Property and business entities
The revenue generated from these holdings can offer a source of income that will keep pace with the economic environment. There is still a level of uncertainty with a business however as it may fail for unforeseen reasons. The property market historically has offered a fairly stable place for investments though and can also offer rental income for the landlord. These funds will be subject to taxes.
Unless you have a very significant sum set aside for retirement, which is safely invested in a secure place, it can be challenging to retire on savings alone. If the pot is not earning an interest rate exceeding the rate of inflation, the value of the savings will be eroded as time passes. Taxes will also be charged on those funds.
Retirement Planning Tools and Services
- Be sure to download our free guides on pensions and retirement planning here
- Calculate your pension income options with our pension calculator here
- To find out if your pension is going to provide you with the lifestyle you desire upon retirement, get a review from one of our experienced financial advisors, by requesting a call back here
Retirement Planning Links
- How do I save for my retirement?
- What questions should I ask myself when planing for retirement?
- What are the potential sources of retirement income?
- Should I get a pension?
- What pension schemes exist?
- How does a typical pension fund work?
- How much money should I save?
- How do I get a pension?
- How can I access my pension funds?