5 Tips for Retirement Financial Planning

What is Retirement Financial Planning?

Simply put, retirement financial planning is a process you need to make sure you have enough money saved to support your lifestyle once you finish work for good. A retirement plan will help to identify any gaps in funding and help to make necessary changes before it’s too late.

Retirement financial planning involves creating a budget and retirement savings plan – so that preparing for retirement will be a smooth and beneficial process.

 1. Budget and Determine What Lifestyle You Want 

Although it may seem like a distant dream, your retirement will come around surprisingly quickly – so it’s essential to have a clear idea of the real-life numbers involved.

Try to calculate the amounts you’ll need to be comfortable when you are no longer earning as accurately as you can.

Your expected budget will include food, housing, services, and the rest of the basics – but you should also factor in things like holidays, Christmas gifts, new cars, and a good-sized contingency for any unexpected costs.

Try to be clear about the lifestyle you wish to follow when you retire and the costs involved to ensure you don’t find yourself short of funds.

Did you know? It’s estimated that the average UK couple will spend around £26,000 a year to cover the basics* according to Which? The basic areas of expenditure include some luxuries like a European holiday, hobbies and occasionally eating out.

*Which.co.uk How much do people spend in retirement? May ’21 (https://www.which.co.uk/money/pensions-and-retirement/planning-your-retirement/how-much-will-you-need-to-retire-aNmlv7V7sVe9)

2. Gather Together All Your Pensions and Investments

If you’ve had several jobs in your life to date – or if you have been both self-employed and employed – you may have paid into multiple different pension pots.

It could be a good idea to consolidate all existing pensions into a single pension fund. Combining your pensions makes it easier to keep track of your savings and potentially avoid any unnecessary complications further down the line. Please bear in mind that Pension Consolidation might not be suitable for everyone.

The best approach is to speak with a financial adviser who can compare pension providers and their products to find the best option for you.

Once you’ve received the advice and recommendations, then your adviser can help consolidate all your savings into the best fund without the hassle of speaking to several different providers.

The recommendations could move your pensions into one of your existing funds or an entirely new pot, whichever is more suitable for you.

 3. Pay Off Your Mortgage

In an ideal world, you should have as few significant ongoing expenses as possible when you retire so that your money is freed up to support your lifestyle. This saving will remove a considerable financial burden if you can pay off your mortgage or any large debts while still working.

Once you’ve paid off your mortgage, your property will then reach its full potential as an asset. You will then be able to choose whether to sell it and “downsize” to live off the amount you receive from the sale, enjoy living in an entirely paid-off home, or release equity whilst still living at home.

4. Talk With Your Spouse or Significant Other About Retirement Spending

You and your partner need to be on the same page when it comes to your retirement – particularly if you have household savings or if your finances and expenditure are tied together in any other way.

You both should be in a position where you understand how your income and expenditure are balanced.

You do not want to find yourself in a position where you’re afraid of overspending and cannot enjoy retired life properly without the worry.

5. Speak With an Independent Pension/Financial Adviser 

To make sure that your retirement plan and budget are sensible and well-organised, the best thing you can do is seek professional retirement planning advice from experts.

They will guide you through the process and ensure you don’t miss anything as you prepare for later life.

Hilltop Finance is a team of financial advisers who specialise in pensions, investments, protection, and help with retirement planning.

Contact us today to find out how we can assist you regarding retirement financial planning – including pension consolidation and ISA advice.