How To Prepare For Retirement

 

 

Not everyone wants to retire. For some, working is a way of life that they don’t and won’t want to give up, no matter how old they become. For others, though, it is something to look forward to – retirement can be a time to relax and enjoy a slower pace of life, or a time to finally get round to all those hobbies and ideas that you just didn’t have time for when you were working.

 

In order for this to happen and for your retirement to be a success, it is important that you prepare for it thoroughly before it starts. That way you can really make the most of your time after work, and thoroughly enjoy the later stages of your life. Here are some ways to get prepared and plan for this new future.

 

Work Out Your Retirement Income

The first thing you need to do before you can carry out any plans at all for your retirement is to work out how much income you’re going to have during that time. If you have a private pension, it’s good to know what yield you will be receiving, for example. Your 401(k) is also a crucial factor, and so are any savings and investments such as penny pot stocks that you might have.

 

This is also the time to track down any pensions you might have had in the past. Changing jobs can mean that you might still be entitled to an older pension that you had forgotten about. You can search yourself, or call in a third party to do it for you, although do bear in mind that that will incur a fee, usually a percentage of the recovered pension.

 

Don’t Take Risks

If you’re nearing retirement age now is not the time to take risks with your money. Keep it safe in a good high yield account, in a pension fund, or in investments that you can rely on as much as possible. Taking the money out too early to fund something that may or may not bring you a return isn’t a good idea and could mean that you lose some or all of the money had put aside and built up for your retirement. Keep it safe so that you can make the most of it when you are no longer working.

 

Budget For Changes

When you retire your income will change, and that is something to be sure of. You may also receive it at different times to when you were working. All of this means that your budget will need to be rethought out to account for these changes.

 

By knowing what you want to do in retirement, you can budget more accurately. If there is a trip you want to make, or you need to have enough money to pay for a new hobby, for example, these things must be taken into account and put into your budget.

 

Remember that for most people, retirement income is a lot less than a salary from a job would be, and this can mean that a part-time job is a good idea. Not only will this top up your retirement income, but it will also give you something to do, and stop you from potentially being bored.

 

Budget in advance so that you know just how much money you will need in retirement, and then you will know ahead of time whether you can manage well or whether you need to add to the funds in some way.

 

Clear Your Debts Before You Retire

If you want to be able to retire and not have to worry about bringing in the same amount of income as you did when you were working, then it’s time to look at your current debts and work out a plan to ensure that they are paid off before you retire. Any fixed repayments that you have at the moment will take a bigger part of any money that you do have during retirement, and that could mean that your plans and dreams for this stage of your life have to be delayed.

 

Make sure you:

  • Calculate exactly how much debt you have. That includes credit cards, loans, and even your mortgage.
  • Look at the interest rates on each debt.
  • Pay off the debts with the highest interest rate, as this will save you the most money in the long term.
  • Make a plan to pay everything off in plenty of time. This could mean consolidating your debts into one loan with a lower interest rate to make things easier.

 

When Will Your Retirement Start?

You also need to choose a date for your retirement to start. In some cases, this will be chosen for you through your work – if you work in a professional such as the police service or the military where there is a fixed retirement age. Otherwise you can speak to your employer about when you want to stop working and start taking your pension.

 

As mentioned above, you don’t have to stop working in order to receive your pension money. You might, in that case, choose to do things in stages, by going part time before stopping work completely. This can be the ideal way for many people – those who love their jobs or who aren’t completely sure that their retirement funds will cover everything – to get started. Over time you can reduce your hours until you are not working at all.

 

Prepare Emotionally

Although we have focused on the practical side of preparing for your retirement, you shouldn’t ignore the fact that this can be an emotional time as well. After working for decades, you are now stopping (at least some of the time) and changing your way of life entirely. It can be scary and unnerving, it can feel like the end of something. However, retirement should be looked at as an exciting adventure, giving you the chance to do all the things and go to all the places you’ve always want to but were unable to because you had to work. Looking at retirement in a positive light will ensure you are more ready to begin it.

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