The UK’s current cost of living increase means that more of us are planning ahead for retirement by working out what we’ll need to live comfortably after we finish work.
Single people unfortunately have to shoulder more of life’s costs alone, such as council tax and household bills. It’s therefore sensible to plan retirement accordingly if you’re relying on yourself to foot the bill.
Day-to-Day Saving
Think about reducing day-to-day spending and put the extra away in savings instead. Little by little, this can add up to a decent pot for later life, according to Money Week.
Calculate Retirement Costs
By working out your approximate annual spending, you can anticipate how much you’ll need in retirement and plan accordingly.
Get Prepared
The best time to start savings or investment accounts is right now. Putting some money away in stocks and shares ISA can be worth much more come retirement age.
While you’re getting organised, give some thought to arranging a Lasting Power of Attorney. This document allows you to nominate a trusted friend to make decisions for you should you lose capacity. You can easily arrange an LPA online thanks to specialists offering //powerofattorneyonline.
Assess Your Current Situation
Take a little time to investigate all of your current finances, including pensions you may have forgotten about and infrequently accessed savings. Note down any debts which need to be paid off, and consolidate pensions into one if that will be more cost-effective in the long run.
Clearing debts and rethinking where you live
Planning for retirement starts with an honest picture of your finances and the income you are likely to have. Once you know that, you can work out how much more to save and pay into your pension to reach the standard of living you want.
Debts deserve particular attention. Aim to clear them before you stop working, so that your savings go on enjoying retirement rather than on repayments. Without a second income to fall back on, this is especially important when you are single.
Living arrangements are worth thinking about early too. As we get older, mobility tends to decrease, and you may no longer need the space a family home provides. Downsizing to somewhere smaller can reduce running costs, and single storey homes are easier to live in later in life. Some options, such as park homes, also come with a ready made community and regular activities, which can make it easier to stay sociable and connected.
Building a monthly budget for later life
Financial planning works like insurance for your future, giving you a safety net if something goes wrong with your money. Retirement is far more enjoyable with financial stability behind it, and you do not have to stop work at 60 if carrying on a little longer suits your plans.
A clear monthly budget is the foundation. List your income and your outgoings each month so you can see whether what you will have coming in after you stop working will be enough to live on, and build in room for setbacks and rainy days.
Retirement calculators can estimate your monthly income once you retire and what your expenses will be if you keep your current lifestyle. Many are available online and some are free. For a fuller picture, a financial planner can look at your situation and help you make the most of what you have.