Planning for Retirement: What Should You Consider?

Retirement is a defining period in later life, and a milestone for which the vast majority of working professionals in the UK are aiming. Whether planning to retire early, or retiring around state pension age, it is important for budding retirees to plan their transition carefully. What should you consider before starting your retirement?

Creating a Budget

Retirement is a big decision, and one primarily led by decisions of a financial nature. As such, the first and most important step in the retiring process is to plan out a retirement budget. This budget would ascertain your existing position, from savings and income to investments and assets, as well as your prospective cost of living after retirement.

In creating this budget, you will also be making some crucial decisions about the nature of your life post-retirement. What will your weekly budget be, and will you be improving, maintaining or reducing your existing quality of life?

All told, your finished retirement budget will give you a roadmap for your golden years – helping you understand any essential income milestones, or any steps necessary to ensure maximal comfort and financial security.

Protecting Value, and Accessing Funds

Important as advance planning can be, there are some situations and emergencies for which no amount of planning can account. The current cost-of-living crisis, precipitated by skyrocketing energy prices, is a perfect example of external economic factors and the impact they can have on household spending power.

It is also true that inflation, as a general rule, devalues cash over time. As such, you may find that your retirement fund loses its spending power naturally and passively – impacting your quality of life as a result. The solution here is to earmark ways in which you can access funds to offset monetary challenges in later life.

One key way to protect the value of your savings is to invest it, either in stocks or tangible assets. The stock market can be a useful way to keep your money on track with inflation, while the property market is generally robust. Of course, the value of your existing property can also be leveraged for short-term cashflow; if you are of retirement age, you can use an equity release mortgage to relinquish some of the value of your property as a loan or annuity.

Your Estate, and Your Family’s Future

Lastly, your retirement planning will also need to take the future beyond your retirement into account – specifically, the future of your family or next-of-kin, and the estate you will leave behind. By pre-planning the management of your estate after death, you can lighten the load on your retirement and enjoy it all the more. You can also better benefit your next-of-kin, by planning shrewdly with regard to inheritance tax.