Retirement - the secret is having a plan

As the world around us is changing (and not just from the C word which will not be mentioned) our lifestyles are changing it with it. Long gone are the days where we worked for one or two employers from leaving education until hitting the magical retirement number, how many of us remember parents or grandparents with the countdown calendar. Now as a nation we tend to move around employers, spend some or much of our working life self employed. The majority of people I speak to now do not leave a career overnight but have a gradual retirement with many downsizing their jobs to something less stressful or part time.

Previous generations also had the security of a final salary scheme as a pension waiting to pay them a generous percentage of their working salary for life and subsequently passing a portion of this onto their spouse on their death. Retirement required very little planning apart from how to spend their money in their newly found freedom.

More recent generations face a very different challenges with pensions that rely on being back by investment often managed by the individual who has very little to no knowledge of the how or where to invest. Many smaller employers who have dire pension schemes or until recently no pension scheme at all has left too large a percentage relying on the state pension which is not overly generous in providing a standard of living to allow for luxuries.

So what is the secret to a financially secure retirement? From the evidence that I have seen it is all about having a plan of which there are many options:

1. taking responsibility for your own pension, this means keeping a close eye on your own pensions possibly consolidating existing pensions into one from previous employers which can be more cost effecting and easier to track. Making sure where they are invested is in line with the amount of risk that you want to and are able to afford taking. If you are self employed or working for an employer who contributes the minimum this will likely mean making additional contributions (ltd company owners can get a good tax benefit from this as well). The downside is that you need to start much earlier than you anticipated, if you plan to retire at 65 realistically you could be living off your pension for 30 years plus, it can come as a huge shock to those who start pension planning in their 40s how much they need to set aside each month into a pension.
2. getting into property, this is fast becoming a popular route with more and more people becoming property 'experts' buying up property as BTLs, HMOs and doing flips (if you don't know what those are and plan on retiring through property it could be time to educate yourself). This can be a reliable source of income for the long term as logic dictates that with the number of people in the UK and the houses available property will always be in high demand. One word of caution this is not for the faint of heart, many lose substantial amounts of money buying a bargain, are faced with mortgage repayments on empty houses, non payment of rent and vast bills to fix up the damage. Also do you want to be dealing with tenants when you are in your late 80s and early 90s? Also mortgages come to an end at some point and this can cause large issues for landlords who may be older especially if they are struggling for capacity at that point.

My advice as an independent financial adviser and based on the clients I have dealt with is that what the plan is isn't as important as the actual having of one and sticking with it! If you don't know where your retirement is going to take you then a independent financial adviser will normally offer a no obligation first meeting to talk you through where you are now and where you want to be in the future.

Failing to plan is planning to fail and for a comfy retirement why take that risk.

Katherine Rowell

[email protected]

07486424465

Risk warnings - investments can rise and fall in the future their is always a risk that you may get back less than you invested.

your house (including buy to lets) may be repossessed if you do not keep up with your mortgage payments.