How to Plan for Your Retirement

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Retirement is an experience that pretty much everyone can look forward to, though those of a younger age may be a little less enthused to plan for it. Retirement can be a glorious time to indulge in personal passions and relax after a long time contributing to the workforce, but it can also be difficult and stressful to plan for. The following tips are here to guide you through your retirement plan, and help you feel more at ease with your transition to post-work life.

Preparing Emotionally

It must be said that preparing emotionally does not simply refer to reckoning with the fact of aging. It also encompasses making deliberate and robust plans for your retirement well in advance, to ensure the smoothest of transitions and minimal effect on your quality of life. Early decisions can include increasing payments to your workplace pension, in order to make the most of compound interest – while bigger decisions might include whether or not to move to a quieter neighbourhood, and whether or not to invest in a larger house or downsize.

Of course, there is an emotional aspect to retirement, and not setting yourself up with engaging activities can negatively impact your mental health. Maintaining an active social life is key to an enjoyable retirement, with volunteering and hobbies being excellent ways to stay active and engaged.

Using Your Pension Pot

Managing your pension pot is a major part of retirement planning, and between the ages of 55 and 65 you are usually allowed to begin taking money from your pension – with defined contribution pensions accessible from around 55, and defined benefit pensions around 60. Choosing how you receive your pension is key, with a number of possibilities open to you: you can receive a tax-free lump sum amounting to 25% of your pot, and receive the rest as an annuity; you can receive the whole of your pension as a lump sum, 25% of which is tax-free; you can keep your pension invested in the scheme and receive instalments ad hoc.

Dealing With Debts

Going into retirement with pre-existing liabilities and debts can be a stress-inducing prospect. Reducing or eliminating that debt is a positive for your retirement finances, as well as a relief from the anxiety of owing. Citizen’s Advice is an excellent free resource for those confused or overfaced by any of the debts they owe, and speaking to advisors can help create a programme for you to follow, in order to consolidate and pay off your obligations. 

Boosting Your Retirement Income

To ensure your quality of life is improved, or at the very least maintained, you can opt for an equity release mortgage to free up investment in your property. Equity release allows you to access equity in your home as an up-front loan or in instalments, with repayment taken on the sale of your property later on. The injection of a lump sum from your home’s equity can make all the difference to your immediate spending power, and make retirement a much less stressful transition.

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