Retiring was at one point a near-inevitability for every working person in the UK. Today, this feels not so true, as climbing living costs meet a falling national life expectancy to create a worst-case future in which many work as long as they can.
Still, planning for retirement is an extremely important thing to do, if only to ensure you have enough set aside for the essentials when it comes time to down tools. But what does managing your retirement finances look like?
Professional Financial Management
For the retiree with different channels of income or wealth to consider, or even for someone simply confused about the best way forward with the money they have, independent financial advice can seem like a good idea. A third party would advise you of the best instruments and services for you to place your money in, and how best to structure your finances for retirement and beyond.
However, doing this comes with its own layers of risk, beyond the risk of investment itself. Financial negligence is a distinct possibility, wherein an individual gives you false or misleading advice leading to the loss of your money or your inadvertent breaking of financial law. As such, caution is advised, and your own approach recommended.
Savings
Savings are a vital way to bolstering retirement income, and for affording those bulk costs that do not factor in to regular weekly spends. Saving is not the most efficient way to grow money for retirement, but there are ways to maximise the amount your savings work for you. A Lifetime ISA enables you to put money away towards a home or towards retirement, with a 25% government bonus of up to £1000 added each year.
Investment
Investment is the shrewder route to building a meaningful tranche of retirement savings, and the main thrust of what any third-party financial advisor would be suggesting on your behalf. Here, money is placed into assets in order to benefit from their growth in value. Property is one of the most secure ways to invest, but there are also safe ways of investing in the stock market – such as global index funds, that track the general growth of international economies, generating low-risk capital gains and often beat bank interest rates in the process.
Budgeting
For the average retiree, budgeting will form a primary and central part of any financial planning undertakings. Even with a robust private pension plan and a guaranteed State Pension income, the majority of retirees will find their income dramatically lower than their potential income as a worker. As such, it may be necessary for some to adjust their living standards accordingly – or to budget carefully in order not to deplete savings that were so carefully built up.
Retirement is not meant to be an equation, though. Retirement is there to be enjoyed – which justifies another side to budgeting. With a careful approach to how your money is allocated and spent, you can safely ringfence funds for the fun things, be they holidays with family or funding personal hobbies.
