Practical advice on how to start planning your retirement finances.
Retirement requires a lot of planning, now more so than ever before. We’re not just talking about how you’ll save money, but also how you’ll spend it. Because if you don’t know what you’re going to spend your money on how are you going to know how much you’ll need to be able to live comfortably? Comfort is, ultimately, what retirement should be all about and to be able to live in comfort you’re going to need to adapt the mindset a top financial planner.
Set a goal and stick to it
What does your life look like after retirement? Do you plan to go on two or three expensive cruises a year and live in the lap of luxury or will you be content with one summer holiday a year and the means to live comfortably? This will dictate how much you’re going to need to save to be able to retire the way you want to retire.
Once you have a rough figure, you should be able to figure out roughly how long it’s going to take and how much you can afford to put away without compromising your life today. It’s a tough balance to find but having that goal in sight will really help you find it.
Set a personal safe withdrawal rate
Your personal safe withdrawal rate is the amount that can be withdrawn from your savings or investments without compromising your end goals. It’s a key part of any solid retirement plan. This rate is generally expressed as a percentage of your total investment portfolio value that is then converted into a sum linked to inflation.
This rate will depend on your end goal and how many different pies you have your fingers in, so to speak. It will also depend on the age at wish you hope to retire and whether or not you want to leave anything behind for your friends and family.
When does the pension kick in?
State pensions are still a viable source of income for those that have been paying national insurance all their lives. There are also private and work pensions to consider. These are all going to help keep you afloat in your golden years and should be factored into the equation when working out your safe withdrawal rate.
Are you ready?
Finally, before you pull the plug and start to settle into retirement you should ask yourself if you’re actually ready to retire on an emotional level? You’d be surprised how many people retire early and then regret it after a few months when they realize how bored and unfulfilled they are.
Retirement should be a reward after a life well-lived, not something you want to reach for just because everyone else thinks you should. If you love your work and want to carry on working into your 70s then don’t let anyone tell you it’s not right. It will only make that eventual retirement even sweeter when it eventually is the right time.
Advising elderly relatives
Finally, we come to a new challenge for an ageing population – how do you provide financial advice for elderly relatives? As we age, financial decisions can be impacted by cognitive decline and diminished financial capacity. The experts at Bankrate have put together a guide with advice on how readers can help their elderly parents manage their investments. It includes how to best start the conversation, assessing their portfolio, and assisting them with financial decisions.