The three key pre-retirement questions
We all look forward to stopping work, embarking on a new path and making the most of our new-found freedom. But with all the talk and concern about dwindling retirement funds and our shaky economy, there are three very important questions you must consider when preparing for retirement.
1. How long will I be retired for?
Depending on the age at which you stop working, you could be retired for almost as long as you’ve been saving for retirement. Be clear about when you want to stop working, but think of your pension savings as deferred pay and budget accordingly.
2. How much do I need to invest?
Have a plan in place and stick to it. Unfortunately, many people are not receiving advice with regard to the amount they need to invest and how much money they will require to enable them to have a comfortable retirement.
Paying more into your pension or reviewing your pension may not necessarily be top of your to-do list, and it’s often tempting to consider it something you need to worry about only in the future, but by then it may well be too late.
3. How do I stay on track?
Recent research suggests that many people don’t really know the true value of their pension until they are older and in the run-up to retirement, despite the fact that they are likely to be receiving annual pension statements. You should regularly review your pension.
From my experience, these are the main areas that people are not addressing. I think with the recent changes in legislation more and more people are seeking advice on their pensions, which is definitely a good thing.
Retirement can seem such a long way in the future, however, as most retirees will acknowledge, it can creep up very quickly and before you know it, you are getting your free bus pass!
If you are looking to better understand your finances, or want to see if you are on track to retire, it could be worth speaking to an independent financial adviser.