Saving for retirement can seem like an extremely intimidating prospect as a young adult, however, it has never been more important than now to put plans in place so you have enough money to get through comfortably in your later years. Over the last few decades, there have been significant changes to the way in which people have managed their retirement plans due to the changes in the government’s pension scheme,
With this in mind, it’s important to start planning for your retirement as early as possible to ensure you’re set up for a richer retirement and a more comfortable life once your working days have come to an end.
Understand the time span you have left
The basis of your retirement plans should focus on your current age and the age you plan on retiring. Ultimately the number of years between now and your predicted retirement age should help you put together a rough plan on how to make use of your cash. For example, if you’re in your 20s or 30s, putting your money into stocks and shares carries a high level of risk, but will ultimately allow you to build on your savings in the long-term (approximately 10 years).
Additionally, you need to think logically about whether or not you can afford to stick to current commitments when your retirement plans are nearing. For example, you may be keen to pay off your child’s college fees, move to a large premises and save for retirement – but working out how much you can afford in a set time frame is crucial.
Monitor your expenditure
If you’re used to spending large, you may need to think about whether you wish to keep up the lifestyle when you retire. Having an idea of your level of expenditure will certainly help you to plan for the future. As you won’t be employed at this stage and earning a salary, you’ll likely be living on less money than you’re used to, however, this all depends on how much you have saved before hitting retirement age. Also remember that during the retirement years, you may have already paid off your mortgage and had your children fly the nest which previously would have drained some of your monthly income, so ultimately, you’ll have this extra element of freedom.
Look for ways to boost your income
If you haven’t yet retired, you may still have a few years to boost your pension income. This can be achieved by increasing your pension contributions to however much you can afford. Another option may be to suspend the date you are eligible to take out your pension, so you have more time to save up.
Consider your home as a source of income
If you own a home that is too large now that the children have grown up and moved out, you may be able to consider using it as a source of income when retirement is nearing. Homes are often the biggest purchases we ever make in life, therefore, you may be able to release some of the funds from it through an enquiry release, to guarantee a more comfortable retirement. In this effect, you’ll be taking out a smaller loan which will be paid off in the years ahead or if you happen to pass away.