Take control of your retirement and make the right choices now to influence how comfortable you could be when you retire. While inflation, unexpected events and investment market performance are outside of your control, you can prepare better for all eventualities.
You may need more to spend than you think, you may live longer than you expect, the cost of maintaining your health may take you by surprise – why not put a plan in place to help you not just survive retirement, but thrive in retirement?
By addressing the major factors which can affect your financial outcome, you can feel reassured, knowing you are doing all in your power to shape your future – and to enjoy the retirement you deserve.
Know your worth: assess the value of your assets and liabilities
Effective retirement planning starts with clarity. You can gauge your overall financial situation by assessing what you have (assets) and what you owe (liabilities), and by measuring your income versus your expenditure. For a more long-term picture the value of your assets, including pensions, ISAs, cash and property can be offset by any outstanding liabilities such as mortgages, loans and credit card debt.
To get an idea of your day-to-day situation you can weigh up your income, including salary, dividends and rental proceeds and balance that with your expenditure items such as living costs, discretionary spending and school fees.
You can also gauge the potential value of your state pension from this government website, as well as finding out when you qualify and whether you can top up partial years to boost this valuable guaranteed income.
The figures that emerge will give you a better idea of your overall financial health, and provide an indicator of what you might need to live on in future, allowing for the fact that your spending needs will change depending on your goals.
Planning and implementing your plans: why it pays to focus on what you can control
While you can’t control factors such as inflation and market returns, you can reap considerable benefits from focusing on the factors you can control when investing. By paying attention to these four attributes, you will go a long way towards achieving your life’s objectives.
• Your fees – to boost growth potential. Even 1% lower annual fees could give you £17,000 more for every £100,000 invested over 10 years.
• Your time in the market – to avoid missing out. Staying invested, rather than trying to time the market can lead to substantially higher returns over time.
• Your portfolio diversification – because asset performance varies each year. Nobody knows which assets will perform best on any given year, so the best strategy is to have a wide mix of assets to help you capture gains and protect against losses.
• Your use of tax wrappers – to make your money work even harder. Sheltering your investment growth from tax makes a considerable difference over time – for individuals and for a whole family.
Find out more about the significant positive benefits being in control could have for your retirement. Read the article here.