While retirement marks the beginning of a new and exciting chapter in our lives, the process of preparing for the transition (both financially and emotionally) can be overwhelming to say the least. If you’re entering the twilight of your life and you’re in need of some advice when it comes to managing your finances in retirement, consider taking these top money management tips on board:
Managing your pension: Depending on how much money you’ve saved over the years and whether or not you have any passive streams of income, you may have to rely on a pension for the bulk of your income in retirement – whether you’ll be entitled to a basic State Pension of £141.85 per week, the new State Pension or a private pension will depend on your age, service provider and working history. To avoid surprises down the line, try to pay into your pension and check up on progress regularly before you retire.
Assessing your finances: Once you have a better understanding of your pension eligibility and you know how much you’ll receive each month, it’s time to assess your finances thoroughly and calculate a budget based on your income, savings and outgoings. Try to find ways to reduce outgoings wherever possible and be prepared to make changes to your lifestyle if you’ll experience a reduction in income once you retire – this could include cutting out holidays, cancelling subscriptions and using a new supermarket for grocery shopping.
Alternate sources of finance: If you’re looking to collect some extra pennies for luxuries and necessities like emergency home repairs and renovation projects but you don’t want to take out a loan, consider making use of alternative sources of finance such as an equity release mortgage, where you can release a portion of the funds stored in your property to spend as you wish.
Creating retirement income: Just because you’ve retired, it doesn’t
mean that you can’t create new sources of income by doing the things you enjoy – in fact, retirement is a great time to utilise your well-honed skills and experience to turn a profit, whether that be providing services based on your interests or renting out your property to lodgers.
Retirement investments: Rather than dumping your hard-earned savings into a stagnant savings account with a low rate of interest when compared to the rate of inflation, consider investing your money wisely and shopping around for the best savings accounts with the highest return of interest. If possible, aim to deposit your money with a good-to-average return investment savings account to generate interest on your savings and increase the value of your family’s inheritance when you pass away.