1. Budget for your retirement
One of the most important things you can do before anything else is actually draw up a budget for your retirement. Make sure you account for all of your income and expenditure, so it is easier for you to identify exactly how much money you have at any given moment. It’ll also help you figure out if you need to make any difficult decisions regarding cutting your expenditure.
2. Make the most of your pension
To put yourself in the best possible place for retirement, you’ll want to take advantage of pension opportunities with your current employer. Under legislation passed in October 2012, UK employers are legally obliged to offer you a pension if you meet certain criteria.
Typically, pension schemes offer you the opportunity to match the contributions you make. For instance, when you pay 3% of your salary into a pension pot, your employer will match this figure with a 3% contribution of their own. Some pension schemes will allow you to place a larger contribution into your pension saving pot – there is an annual cap of £40,000.
The state pension isn’t something to be dismissed either. From 2017, when you reach the age of 65, you’ll be eligible to £159.55 a week – as long as you’ve paid 30 years of national insurance.
3. Ensure your home is retirement ready
Before retirement, you’ll need to evaluate your home and whether it’s still suitable for you and your lifestyle. As you get older, you may have mobility issues that affect your ability to get around: will a large house, spread across multiple floors, impede your ability to move around your home? Will you need equipment such as a chair lift? Or perhaps it is time you consider downsizing and selling your property?
It is likely that your house is your biggest investment, so downsizing might be an effective way to fund your retirement. Especially, if you’re able to cash in on rising property prices.
4. Make sure you make a will
Writing a will is a relatively simple, important task that’ll not only help your family during a very distressing period, but will also ensure your assets are divided in the way you intend.
If you don’t leave a will, law will dictate what happens to your assets – and sometimes this won’t be what you want or have intended. For example, your assets may not get distributed the way you’d like them to be, or in some cases, your assets may end up going to the Crown.
You will need to write a will if you would like your assets to be shared with people, organisations or other parties outside of your family. In some cases, wills can also be used to reduce the amount of Inheritance Tax you’ll pay when your estate is divided. If you’re in doubt, the best thing to do is seek specific legal advice about will writing to make sure you get it right.
5. Look after your mental health and well-being
While you may have been waiting to ‘do nothing’ for the rest of your life, it is important that you fill your time with activities and people that will continue to keep you engaged. There is a direct link between social isolation and an earlier death in older adults, according to research conducted by researchers from University College London.
What hobbies do you enjoy? Perhaps it’s time to take up something new? Something physical is a good way to keep your body moving and will help with your overall health.
Perhaps even think about getting a part-time job to add some structure to your life and a steady stream of income to enjoy other activities in your retirement.
It pays to be prepared for your retirement. It’s a very exciting time, full of change and challenges. With a solid plan, you’ll be able to make sure you’re in the best possible position to enjoy your retirement to the full – and to account for anything that might surprise you.
Hugh Thompson is head of private client at Lupton Fawcett