Retiring early is the dream for all of us, it is a chance to do more of what you enjoy, yet unsurprisingly the majority of us have never tried to calculate how much money we will need to save to live comfortably in retirement. Your likely income needs will depend upon whether in retirement you want to move to a new area? Go on regular holidays? Run a car? Or simply just enjoy the odd evening out with friends? All of these cost money and working out how you would like to spend your time can help envisage how much income you’ll ideally need.
When should you retire? As there is no set retirement age in the UK any longer, you can carry on working as long as you like (or as long as you need to). If you have a defined contribution pension then you can access it from the age of 55 onwards, however the longer you can wait the longer it will last during your retirement.
Since the introduction of flexible access to your pension this makes it easier to retire gradually by reducing your working hours. Continuing to work part-time could enable you to save more of your pension for later or even keep contributing to it.
Now is the time to predict your likely income in retirement and see how well it measures up to your expected needs. It can be tempting to attempt to plan for your retirement on your own. However with so many different options for retirement savings and future income sources available, working with a financial adviser is a good choice to help create the best plan possible to ensure financial security.
You will be planning for a long and happy retirement, but now may also a good time to update your will, in case the unexpected happens. You should also ensure your expression of wishes on your pension is kept up to date.
As you get nearer to retirement age there are a few people you need to speak to. Firstly chat through your plans with your employer. It will give them the chance to offer you an alternative or simply let you know how the process works at the company. You’ll also need to contact HM Revenue & Customs because your tax code should change when you retire. You will also need to speak to the Department for Work and Pensions to claim your state pension.