Have you started to think about your retirement?

Are you putting off planning for your retirement? Let’s face it, the thought of it can be quite overwhelming. There are so many different factors to consider, and you may not yet have a clear depiction of what you want your retirement to look like. Perhaps, there simply aren’t enough hours in the day to tackle one of the most important decisions in your life.

If you are struggling with where to start, take a step back and try to visualise your retirement. There’s no ‘one size fits all’ when it comes to retirement, so an important part of your planning should be understanding your ideal retirement and creating a new lifestyle for yourself once you have given up work. Your job will more than likely have played an important role in your life and the prospect of stepping away from the security it brings may feel intimidating.

Although leaving the planning until your retirement date may sound appealing, it can mean missing out. Taking a proactive approach in the lead up to retirement can provide focus and help you work out a plan so that you can enjoy the retirement you deserve.

The five questions below can help you start thinking about the type of retirement you’ll want to look forward to.

What does retirement mean to you?

• Do you want to stop working altogether, keep working as long as possible, or gradually reduce your working hours?
• Do you have a specific age in mind?
• Will you want to sell any assets, such as a business or a property?

How do you want to live in retirement?

• Are there any ‘once in a lifetime’ dreams you want to fulfil?
• Have you any plans to move abroad, or purchase a second property?
• Do you anticipate living in your current house or downsizing?
• When will you need to generate retirement income and how much?
• Will you need your income monthly, quarterly or annually? Does it have to be paid on the same day?

How much risk can you afford to take with your income?

• Do you need to pay specific bills or regular payments out of this income?
• Does it matter if some or all of your income fluctuates, and goes up or down? How much?
• If this income was not paid out how long could you last from other sources? What other income sources or assets do you have available?
• How important is the certainty of income, is there a minimum you need to meet?

How much risk do you feel comfortable with?

• Would you rather take some risk with this income to see if you can gain more, even if this means it may go down and you could lose it altogether?
• Is it important for you to retain flexibility by accepting this comes with some additional risk, or would you prefer to make an irreversible decision in return for greater certainty of income?
• Are you more concerned about the risk of inflation eroding the relative value of your money, or investment fluctuations eroding the absolute value of it?
• Are you comfortable with retaining on ongoing involvement in managing your retirement income, albeit with professional help, or would you rather make a decision and then forget about it?

Preparing for the worst

• How healthy are you? Do you have any illnesses or any concerns about how long you might live, or require income for?
• Do you have any future financial obligations to meet, such as debts?
• Do you have dependents, such as family, who would be reliant on your income when you die? When if at all, would this dependency end?
• Do you wish to leave an inheritance?
• Should you need specialist care in later life, do you have any views on what type of care you would prefer?

Thinking about retirement can be daunting, which is why it’s sensible to seek guidance from a specialist who can offer you tailored retirement planning advice. Working with a Financial Planner can help you transform your retirement planning, in a way that suits your goals, tax efficiently.

We’ve created this guide that outlines the different options available to you from your pension funds when you retire. It also provides useful information about the state pension and the benefits available from workplace pensions your employer may have provided for you. Request your Retirement Options guide by clicking here.

To get started on your own journey with a PenLife Financial Planner, or to discuss anything you’ve read about here, email us at enquiries@pen-life.co.uk, or call 01904 661140.

Please note: The FCA does not regulate, tax planning, estate planning, inheritance tax planning, cashflow modelling or wills. The value of your investments can go down as well as up, so you could get back less than you invested.

All information is correct at the time of writing and is subject to change in the future.