Retirement planning 101: Securing your financial future

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It is never too early to start thinking about your retirement. The UK population is living longer than ever, so having funds to live from is essential. Dreaming of holidaying abroad or finally getting to unleash your inner creative can help to while away the hours, but you need to be practical about it all too.

Here are some steps you should take to plan for your retirement.

Maximising pension contributions

Pensions are pots of money which you and your employer contribute to, as well as the government. You are also entitled to a State Pension. These pots are then used to pay you monthly so you can live. The most common way to prepare for your retirement is to put money into pension plans. Your workplace may have a plan that you have been paying into, but there are private options as well.

There are many different ways pensions work so you will need to look into the conditions for any you have already paid into. Remember to check any pensions from jobs you have left in the past too.

Understanding retirement goals

Your retirement spending will likely look very different to spending in your 20s or 40s. This is usually due to a lower income. You can begin to mitigate this by getting a budget together. Start by focusing on essential spending such as living costs and food. This leaves you with your discretionary fund for hobbies, travelling and enjoying yourself.

You can use your current pension statements to base your budget on. These will show you any potential lump sums or monthly payments you will receive. You will also be able to see if you need to save more to live comfortably.

Smart investment strategies

Another common way to maximise your retirement fund is to make investments in your career. Investing may seem like a high-risk/high-reward world in the films, but you can start slow and with low-risk investments.

Speak to expert financial planners. They can guide you through your investments, making sure you understand exactly what is going on, the risks involved and what you are investing in. Once you feel more confident, you may be able to increase the amount you invest or change the risk levels.

It is important to have a diverse investment portfolio. Investing in lots of different sectors helps to spread the risk around. This means that if the agricultural sector, for example, suffers an economic blow, you still have income from other areas to fund your lifestyle.

Adapting plans to life changes

As with most life plans, you will need to be adaptable with your retirement plans. Changing jobs can mean you start a new pension pot so your overall balance will change as the conditions change.

You should also regularly review your retirement budget plan. Bills, living costs and food prices all change so keeping an eye on your likely future expenses will help to inform your current financial decisions.


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