Retirement sneaks up. If you don’t believe it does, cast your mind back… remember turning twenty years old and wondering how your teenage years somehow departed without a committee meeting or anything to approve the decision? Or perhaps you have turned 30 or 40 and you still don’t know quite how whole decades have been added to your age? In the same respect, retirement is coming, and it’s not going to wait until you’re ready. That’s why we must plan now.
Something you can do right now is ‘tie in’ your various pensions. Many people have multiple jobs throughout their working life, with different pensions set up here and there as they go. By consolidating your pensions, things could be made much easier (see this info on transferring your pension, for example). Now, let’s look at a couple of things you may not have considered regarding your retirement.
Work out your income & budget for the spending changes ahead
First, you need to work out your income after retirement. This will give you a monthly payment from which you can subtract all of your usual outgoings.
The thing is, when you retire, your spending habits will likely go through a drastic change, meaning your current spending habits may not hold true once you clock out for the last time. For example, the costs of commuting, eating lunch at work, and buying work clothes are all expenses that will now change. Other factors that may also change include the necessity of staying living in the same place or the need to own and run more than one household vehicle.
Thinking about your average monthly income and paying attention to your likely spending habits will shed some light on whether you are going to be content with your pension or whether you may wish to look at other ways to bring in money after retirement.
Consider ways to increase your monthly income after you retire
Reaching retirement age doesn’t mean you can’t work anymore. It simply means you qualify to begin claiming your pension. Many people choose to boost their income by taking on work in their retirement. This is for two reasons. The main and most obvious reason is to do with finances, but secondary to that is the need for daily structure and having something of a purpose in life – all that free time can be daunting after the first few days spent pottering around the home.
Perhaps the most popular choice of part time work involves continuing in your current role on reduced hours (obviously, this would have to be discussed and agreed with the employer). Or you may wish to think about part time work in something that is fun to do, such as dog walking, house sitting, gardening, teaching skills like piano or languages, and completing various handy-work tasks throughout the neighbourhood.
Whatever you choose, planning for your pension years ahead of time means fewer surprises when the time comes to say hello to your new life.