10 top tips for a comfortable retirement
1. Review your expenditure
Start with your current outgoings then revise which are important.
Work out what your 1. Your basic minimum std of living will be £???? pa
2. your comfortable std of living may be £???? pa
Don’t forget to include any housing costs, transportation costs, medical supplies spending money, food costs, travel/holiday budgets & out of pocket expenses.
Importantly one of the best tips I can give is an obvious one and that is: Reducing unnecessary monthly outgoings is ALWAYS a valuable income boost but especially in retirement
2 Make a list
Of all your assets which have the potential to generate a future income.
Such as: State pension benefits, insurances, Investments, savings, rental property,
spare rooms, garage rental, working part time, rent or sale of unwanted items/valuables. etc
3 Think about the real growth
You need to account for the real effects of inflation.
Try to focus on the difference between the inflation rate your investment returns.
For example – a inflation rate of 4pc per annum and an investment return of 5pc
provides a real return after inflation of just 1 per cent. But that is real growth
Remember - If you live a long time then inflation will be your biggest enemy!
4 What is your attitude to risk?
You may need your invested capital to produce income. Ideally your portfolio
should reflect the most suitable asset allocation that matches your attitude
to risk and the losses your willing to except
5 Can you defer your retirement?
Sometimes deferring state pension or annuity income or indeed by phasing your retirement income can prove to be a very effective strategy, maybe by waiting for markets to improve.
6 Should you buy an annuity?
Annuity rates are low it might be worth waiting for rates to improve. But you must beware the risk that yields could fall further.
If you are not in good health then maybe impaired lifetime annuities may just offer the best income.
Perhaps a drawdown or flexi drawdown could offer you better income options or maybe in combination with a lifetime annuity, phased and flexi drawdown.
Fixed term annuities may offer you some the highest income options with a guaranteed maturity at the end of 5 or 10 years with even longer terms available
7 Are your assets in cash?
Moving part of your assets into cash or near cash, before your retirement date can be a smart move.
especially if markets are high or near high and you don't have the time to wait to recover losses if markets fall again.
8 Cut your coat according to your cloth
Maybe if market conditions dictate, you use your tax free lump sum for more practical purposes such as covering living expenses or allowing markets/rates to improve
9 Are you aged 55?
From this age you have various retirement income strategies worth considering. such as low start retirement by reducing your working hours over a periosd of a few years.
Maybe using some of your pension tax free cash for to fund requirements, various drawdown strategies, downsizing property, reducing working hours etc.
10 Make provision for living longer
Improved longevity needs to be considered but income will still need to cover the cost of living longer. You may need to plan to take action sooner rather than later.
One thing is for sure, with so much as stake and so much to consider, its always a wise move to consider using an experienced independent financial adviser (IFA) who will help to make the right decisions for a small fee.
Quite simply – you can't afford to mess your retirement up!