Financial planning for retirement

Though the age of retirement seems to be increasing, there will come a time in all our lives when work becomes a thing of the past. Having adequate finances to support yourself during this time is critical for making a happy and healthy transition into retirement. So what measures can you put in place to get you there?

In this blog we take a look at some of the ways you can plan for your retirement, so keep on reading to find out more. 

Pensions

Pensions are a great way to save for your retirement, they offer a way to invest your money with the added benefit of tax relief. Most individuals receive basic tax relief of 20% paid into your pension pot when they contribute. Higher-rate taxpayers can expect to receive 40% tax relief on pension payments, and the highest rate of tax relief goes to additional-rate taxpayers at 45% on pension payments. 

State pensions

Currently, those who qualify will receive a state pension from the UK government when they reach the age of 66 unless they decide to defer. The full state pension currently sits at £203.85 per week, so while these payments are welcomed, some will find that income from the state pension alone is difficult to sustain their standard of living. 

Workplace pensions

As of 2012, employers have to enrol their employees into a workplace pension in which both the individual and company contribute. The minimum amount paid into the pension needs to add up to 8% between the employer and the employee. However, employers only need to contribute a minimum of 3% of this. Once an individual reaches retirement age, they can then draw down on this pension pot as a means of topping up their income from their state pension. 

Personal pensions

You also have the option to open a personal pension account if you want to save beyond your workplace pension. Personal pensions offer another way to invest your money with the benefit of tax relief. You’ll have the option to select the fund your money is invested into and contribute with regular payments or one-off contributions. 

While pensions are a great way to build up your finances, there are other options available to secure your retirement.  

Investments

Investing is another way you can help boost your income in retirement. In the same way as saving into a pension, investing in stocks, bonds, and mutual funds, can grow your wealth over time. However, investing in these products does not offer tax relief the same way a pension does. 

When deciding to invest, it’s a good idea to establish a diversified portfolio that suits your risk tolerance and long-term financial goals. Consistency is key, so it’s important to start investing early and to regularly contribute to your portfolio. With careful planning and wise investments, you can build a comfortable nest egg for your retirement years.

Property

Investing in property can be another smart way to secure your retirement. Property values tend to increase over time, providing a potentially profitable return on your investment. Additionally, owning property can provide a steady stream of rental income which can supplement your retirement savings. However, it’s important to thoroughly research the market and location before investing, as well as considering the costs of maintenance and property management. 

Further information

While saving for your retirement is important it can be tricky to stick to regular payments. That’s why our team of experienced accountants are here to support you with your financial planning. Why not get in touch to talk to us about how to build your retirement savings or the most tax-efficient ways to manage your property or investments?