For some, this is the start of a new phase of life, free from the demands of working life and the stresses of a 9-5 routine. If you have already planned adequately for retirement, a future life without work should be rewarding, fulfilling and exciting.
If you are still planning how to retire and how to have a reasonable standard of living, your impending retirement date might give you cause to feel more than a little anxious.
If so, this is your guide to preparing for retirement over the next five to ten years.
Start with a plan
You can’t alter what you don’t measure, so in order to save adequately for retirement, you first need to carry out an audit of your current financial circumstances. How much debt do you have? What savings do you have? How much equity is there in your home? What is the value of your pension provisions currently?
You also need to think about the lifestyle you would ideally like to have (this must be tempered with a degree of reality, of course), and work out as accurately as possible what this will cost.
Check with your partner
If you are married or in a civil partnership or long term relationship, you will need to examine yours and your partner’s pension provision together. If your personal finances need a bit or re-organising or your paperwork is in a large heap somewhere, then this might be a good time to get organised.
You might need to request a new valuation for both your pension provisions and it might also be worth investigating how well the pension is actually performing. You can ask to see the funds the pension provider has invested in and it is crucial to see what fees and charges are being levied against you each year.
It also might be worth reviewing if it would in your interest to consider moving your pension provisions to another provider.
If you have decided to retire early, you will need to find out what penalties that you might incur from taking your benefits before your normal retirement age. You will then need to deduct any outstanding debts or liabilities on retirement and you will have your final retirement income.
Don’t give up
Your calculations or benefits might fall short of your retirement goals. This does not mean that you have to abandon your plans for the future, because you still have several years in which you can make a real difference to your savings.
Once your existing finances are working to their optimum level, you need to save as much as you can afford. It might be an idea to conduct a household expenditure audit to see what can be saved each month and what can be allocated towards your pension provisions.