Retire in 2024 - make it a reality

Live a life that more matches what you want to do and is less controlled by an employer and a work contract. You might not be able to retire in 2024, but at the very least you can start the planning process to get on top of your numbers so that you have a roadmap as to how much to save, what to invest in, when you can expect to retire and what you might be able to spend in retirement.

With a little bit of research and analysis you can empower yourself and take control of your finances.

It is important to define retirement. In retirement you want to live a life of purpose. You can help others and earn a bit of money at the same time. One example is teaching people in an area where you have expertise. You could initially volunteer in this area to gain experience and client testimonials. Retirement does not have to equate with not earning any money. Ideally you want to have money coming in that utilises your personal tax allowance (currently ￡12,570).?

By having some money coming in after you have left the corporate world you can potentially retire early. The best way to facilitate this is to build up income streams whilst you are still working for an employer. Some will work and some won’t. A phased transition to a new income stream is much better than relying on an untested business venture.

True wealth is in your mindset rather than your bank balance. Once you realise all the options available to you, it is much easier to visualise that corporate life isn’t the only solution to making money. Stay active in retirement and monetize a passion that you have.

Sometimes planning can be a real pain. You put a lot of effort in, then life gets in the way and you end up with uncompleted tasks which could be worse than having never started planning in the first place.

However, retirement planning is different as it entails tracking what is already occurring. The planning process simply brings empowering clarity to how your finances will evolve over time.?

You don’t know how much quality time you have left. Your health might suffer, you might have to look after an elderly relative. So putting off a memorable travel experience isn’t always a good idea. Some of the most amazing places in the world face a problem of either being overrun with tourists or putting up prices to become more exclusive. Neither is a good outcome for those delaying gratification.

Retirement planning can involve strategies to deal with uncertainty such as stock market returns. This could mean building up a cash buffer that you can access in retirement so you don’t have to sell equities if their prices are falling - you are never a forced seller.

People often over-estimate expenditure in retirement. Ideally they have paid off a mortgage, have no dependent children and aren’t spending money on commuting or on retirement savings. Also by anaysing expenditure it is possible to reduce costs by switching to lower cost alternatives or removing costs for things that you don’t really need.

Expenditure doesn’t have to grow in retirement. As you tick off items on your bucket list there is less of a desire to own designer clothes or drive a fancy German car.

The UK tax system means that you could be paying no income tax in the initial years of retirement as you spend from your ISA or from tax-free cash from your pension. Proper retirement planning will be able to quantify the opportunity available to you.

List out all your assets and liabilities. Look at where your pensions are invested and whether this matches your needs. Some pensions have a large allocation to bonds which might not be suitable if you don’t plan to access those pensions for many years to come.

Put all this into a retirement calculator spreadsheet which will map out your income, expenditures, taxes and wealth over time. A spreadsheet is infinitely customisable and it is fully transparent so you can verify the calculations.

The retirement calculator will model your wealth over time by category.?

It looks at your sources of income and how you access your savings in the most tax efficient manner in retirement.?

It models how much tax you pay and the marginal rate of taxation. This helps with avoiding paying 40% tax in retirement.?

If this interests you, visit my website www.ianshadrack.com/retirement-calculator