Enjoying a long, healthy, and rewarding retirement means putting the right foundations in place. If you don’t set and meet the right goals when it comes to savings, then you could end up not having enough to comfortably take a step away from work until long after you’d initially planned.
But how can you effectively work towards your retirement goals? Let’s take a look at a few tips that every would-be retiree should at least consider.
Define Your Retirement Goals and Timeline
What do you plan to do when you’ve retired? If you set your expectations clearly, then you’ll understand how much money you need to save. This, in turn, will shape your monthly contributions. Make sure that you’ve accounted for the effects of inflation, and that you leave yourself with room to deal with unexpected problems and calamities. Good retirement planning here should be built around the right kind of structure.
Use Tax-Efficient Saving Options
If you’re going to save in the most efficient possible way, then you’ll need to think about the amount of tax you’ll be liable for. It might be that you decide to keep a portion of your income in an ISA, or that you lean into contributions from your employers. Bear in mind that the tax rules around retirement saving are constantly being tweaked – and most savers won’t understand the full extent to which changes in the rules will affect them. It’s worth therefore consulting regularly with an expert.
Balance Growth and Risk Over Time
Savings and investments mean taking risks. In some cases, you can reduce the risk through the right strategies. It might be that you have an appetite for short-term risk at the start of your career, but that as you near the end, you want to try to deal with the volatility. This might mean diversifying your portfolio, and hedging against specific assets, and currencies in particular. By spreading your eggs across many different baskets, you’ll be able to reduce the impact of one of them dropping.
Plan How You’ll Take Income
If you take all of your money out of your pension pot at the same time, then you’ll risk missing out on considerable gains over the course of your retirement.
If you don’t want to risk the money running out, then you might choose to generate income from annuities – but this means sacrificing the interest you might generate. Drawing down from your pension pot keeps things flexible, but it does introduce a little bit of risk. You might take a balanced approach that combines these two ways of doing things.
Keep Reviewing Your Plan Regularly
It’s critical that you don’t simply devise a retirement plan and stick with it. Your circumstances might change over the course of your career, as might your plans for retirement. Make sure that this is reflected in your plan.
