Retirement planning: Four financial keys to a happy retirement | Personal Finance | Finance
The goal of retirement for many is to enjoy peace and relaxation, while for others it is a time for adventure. Jeannie Boyle, Director & Chartered Financial Planner at EQ Investors, spoke exclusively to Express.co.uk to provide insight on the key considerations for Britons as they look to achieve a happy retirement.
Plan what retirement life will look like
Ms Boyle said: “The first step is to work out what you want from retirement. Take some time out to consider what your priorities are and how you would like to spend your time.
“What you want to do may well change over time, but there may be some things that are best done early on.
“If you’re in a relationship, talk to your partner and agree what you want the purpose of your retirement to be.
“Retirement offers the chance to explore genuinely new possibilities. It can help to consider different areas of your life and think outside the box. Ultimately, only you will know what will make your retirement years truly satisfying.”
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How much money will people need?
The new state pension currently provides a maximum of £9,339.20 for a full year, although this will increase from April 2022 to £9,627.80.
However, it is likely people will need more than this yearly income if they are to live their desired lifestyle in retirement.
A single pensioner may need £20,800 per year to live a moderate retirement lifestyle, according to the Pensions and Lifetime Savings Association, more than double the rate paid by the state pension.
Ms Boyle said: “A good first step is to think about your day-to-day spending and then consider other expenses such as extended holidays, or obligations such as paying for the care of a relative.
“You may want to leave money to the next generation; this will have an impact on the strategy you adopt.”
Making retirement money last
There are multiple options available in terms of how to take retirement income when the time comes. Ms Boyle explained some of the choices Britons may have available to them.
She said: “The traditional mainstays of retirement income in the UK: the state pension, final salary pension schemes, and annuities all remove the risk of outliving your savings.
“With income drawdown (making withdrawals from an invested pot of money) it is up to you to make sure that your money lasts long enough.
“To help your money last this long you will almost certainly need to invest it. A combination of investment income and capital growth can help counter the impact of inflation. Cash interest rates are unlikely to be sufficient for most people.”
Ms Boyle also provided a retirement checklist or key items which people should address ahead of their retirement:
- “Make a list of things you want to do in retirement and how much they cost.
- “Work out how your regular spending might change, including new categories of spending.
- “Get a state pension forecast.
- “Legal paperwork: review your pension beneficiaries, update your will, and put a Lasting Power of Attorney in place.
- “Plan to review your progress regularly; small changes early on are easier than larger ones later.”
