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5 Key Steps You Should Follow When Planning Your Retirement
Retirement! More time for family, hobbies, travel – all the things you love, with no work in sight. It’s your chance to finally tick off those bucket list items and enjoy free time like never before.
But hold on. There’s a lot you need to sort out before you can start enjoying retired life, and it’s not always clear what steps you should be taking first. So where do you begin?
If you’re thinking about starting down the path to retirement, let the wealth experts at Lester Brunt be your guide. We’ll walk you through the key steps of retirement planning, from figuring out your budget to reviewing your final plan, so you can feel confident going ahead. Read on to get started!
1. Estimate Your Retirement Needs
First things first, think about your dream retirement lifestyle. What kind of activities do you see yourself doing? Will you travel extensively? Do you want to live in a big house or a cosy flat? Each part of that dream will have some costs associated with it, and you need to know how they all add up…
While everyone’s retirement looks different, here are some key expenses to consider:
- Essentials, including housing (mortgage or rent), utilities, groceries, insurance, and transportation
- Travel
- Hobbies and interests
- Entertainment and dining out
- Potential medical support costs
- Outstanding debt
- Gifts for loved ones
To keep track, it might be helpful to jot down these expenses in a spreadsheet – that way you can easily refer to it later.
Once you have a good idea of your retirement expenses, you can calculate how much money you need to save.
2. Figure Out Your Retirement Income
Next, you should break down your retirement income stream. Here’s what to consider:
- State Pension: This is the regular payment you’ll get from the UK government once you hit State Pension age. The full amount for 2024/25 is £221.20 per week, but the exact amount you’ll receive depends on your National Insurance contributions. You can use the government website to check your estimated amount.
- Workplace or personal pension (if you have one): This is the money you’ll receive based on what you, your employer (if applicable), and tax breaks have contributed over time. Check your pension portal (like Nest or PensionBee) or your annual provider statement for this amount.
- Other income sources: This could be anything from investment returns to rental income or peer-to-peer lending.
3. Identify How Much You’ll Need to Have Saved
After working out the two figures discussed above, subtract your estimated expenses from your retirement income to see how much you’ll need to save on your own. You can then use this number to figure out how much you should set aside each month or year.
4. Grow Your Income
If you haven’t already, now’s the time to start growing your money through long-term investments. Here are your two most tax efficient options:
- Pensions: These are employer-sponsored retirement plans or private plans you set up yourself. Defined contribution pensions, also called money purchase schemes, let you choose how your money is invested. You’ll have a range of investment funds to pick from, often focused on a mix of stocks, bonds, and property.
- ISAs (Individual Savings Accounts): These are accounts where your savings and investment growth are tax-free. Stocks and Shares ISAs are a good option for retirement saving, allowing you to invest up to £20,000 per year.
If you already have a pension or investment plan in place, consider bumping up your contributions to reach your savings goals even faster.
Remember: time is your greatest asset when growing your money. The earlier you start saving, the more you’ll have in your nest egg by the time you retire. If you have enough saved, you may even be able to retire early.
5. Review Your Retirement Plan Regularly
As you get closer to retirement, it’s a good idea to review your retirement plan regularly and make changes as needed. This may involve adjusting your asset allocation, increasing your savings contributions, or delaying your retirement date.
Plan Your Retirement Today with a No Obligation Consultation at Lester Brunt
Of course, this guide is just a starting point. Planning a comfortable retirement involves a lot of moving parts, so to make sure you’re on the right track, your best option is to consult with a financial adviser – they’ll use their expertise to guide you through the entire process and turn your retirement dreams into reality.
At Lester Brunt, we know that retirement plans are as unique as the people they’re for. That’s why our advisers take the time to get to know your goals and aspirations personally, analyse your options, and make sure your retirement savings are working their hardest for you. We’ll use our decades of experience to give you the full suite of retirement planning services, from building a strategy from scratch to reviewing your existing one. Wherever you’re at in your journey, our team is here to help you achieve the retirement you deserve.
Ready to get started? Book a no-obligation consultation online or call us on 01202 695 801 today!
The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.
The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief is dependent on individual circumstances.
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Written By Catherine Scard
Financial Adviser
Lester Brunt Wealth Management
Lester Brunt Wealth Management is a trading name of Lester Brunt Wealth Management Ltd
SJP Approved 15/05/2024