Retirement is a long-awaited stage in many people’s lives. However, not only does retirement require 40 years of work it’s also necessary to carry out a considerable amount of pre-planning in order to make sure that you are able to be financially stable once you leave your working years behind. In an emergency, individuals may need to request a short term loan to cover an unexpected expense, such as a higher-than-expected bill or unforeseen car repairs. However, it’s a good idea to pay off all of your debts in the lead up to your retirement, so you can begin with a clean slate. Here are our top tips for preparing for your retirement financially.
Work Out Your Retirement Income
In the lead up to your retirement, it’s a good idea to plan ahead and figure out exactly how much income you are likely to have once you have stopped working. You can do this by requesting a pension statement from your provider. They will then send you a statement which shows you how much you are entitled to in your retirement. Additionally, you should consider the savings or investments you have accumulated over the years to see whether they can considerably increase your income.
Once you have figured out your expected income, it’s a good idea to work out if this is a sustainable amount before you retire. To do this, you will need to create a budget. Your budget should take into consideration your income against your monthly expenses, such as bills, mortgage payments or rent and average living expenses such as transport and food costs. When you’re creating your budget you need to be realistic with the standard of living you expect in retirement, so make sure you consider whether you are planning to go on holidays or travel as well as the everyday expenses. Your budget should also allow you to keep aside some savings in the event of an emergency.
Review Your Insurance Policies
Insurance policies are important but they are often something we set up and continue to pay throughout our lifetime without considering whether they actually suit our needs. It may be an idea to review your insurance policies to make sure you are not spending unnecessarily in your later years.
Build Your Investments
If you have spent your lifetime building your investments, it’s a good idea to review them and make sure they are still performing as well as they should be. When reviewing your investments, make sure they are keeping up with the current competition. If not consider if selling your shares is the most profitable course of action to take. Additionally, it’s important to make sure that any cash savings you have accumulated are keeping up with constantly increasing inflation rates.
These are just some of the ways you should consider preparing for retirement. It’s important to establish a plan which will work for your personal financial situation, so it could be worth seeking financial advice before you make this exciting step in your life.