These days, planning for retirement often feels a little bit futile. For some, it seems too far off in the future. Others may have delayed planning , only to look at their finances and think: 'I will never get there’. It might seem like a distant dream to retire, but that’s exactly what financial planning is for! You might be in a better position than you think, or at least be able to make a plan to get on track.
Take time now to look at your financial plan and get everything in order for your retirement.
What is financial planning?
Financial planning is taking a full look at your finances and building out a plan to reach your goals. You should look at your investments, savings, taxes, insurances, pensions and any income.
Why is financial planning important?
You might feel as though you have control of your finances, but if you have no plan in place it can be hard to actually know where exactly you are – especially when planning for the future. There are a few reasons why financial planning can be beneficial:
You can see the big picture
You can make decisions to meet your goals
You might find out that you’re in a better position than you think
You could realise you’re not as well positioned as you thought, but will have the time to put it right
Having a plan for your financial future can relieve stress and help you feel more optimistic for the future
Current retirement landscape
When we think about retirement planning it can be a little bit daunting knowing you may have to work until you’re in your 60’s, and it feels like the goalpost is constantly getting further and further away.
Recent results show that 2024 in the UK the average retirement age is just over 65 for men, and 64 for women. However, this is not going to be feasible for everyone as the state pension age is currently 66, and is planned to be pushed to 67 in 2028, and to 68 in 2046. Many also can’t live on the state pension alone, meaning they might have to work later in life to achieve a comfortable retirement.
Reasons to undertake financial planning for retirement
The state pension is not, for most people, really enough to live on in today’s financial climate, so it’s important to stop and look at other ways to save for your retirement to make sure you can live life comfortably as you get older, especially with life expectancy increasing. There are quite a few reasons you should start your retirement planning now.
Financial security
The last thing you’ll want when you’re retired is to be worrying about money and not being able to enjoy life. Retirement planning is important for creating a financial buffer that allows you to maintain your lifestyle beyond employment. It involves setting aside a portion of your current income through savings and investments to fund your future needs.
Healthcare costs
For the most part in the UK we have a great healthcare system where you don’t have to pay to be seen. However, there are certain healthcare costs that can increase as you get older, which you’ll have to pay out of pocket, such as dental work, prescriptions, vision and hearing care, as well as the potential need for long-term care. If you have private medical insurance, this too increases the cost of retirement.
Starting early means more money
Generally, the earlier you start saving, the more you’ll have available to you in your retirement. If you wait until you’re in your 50’s to even start looking at pensions and investments, you risk not being able to meet your financial goals before you need to retire.
Estate planning
It’s always nice to think about what you might be able to leave to your family when you’re no longer here, even if it’s just enough to cover the cost of a funeral so that your family don’t need to worry about it. By undergoing financial planning you’ll have an idea of what you might be able to leave behind to support your partner or kids in the future.
How to get started
So, what do you need to do to get started with financial planning for your retirement?
Start by getting an understanding of everything you already have - all your current savings, assets, income, investments and insurance.
Then when you know how much you have, you can start looking at whether this might cover your lifestyle when you retire.
Think about how long you’d like to work for, and when retirement feels possible for you.
Consider where your money currently is and whether this is the best place for it, for example pension versus ISA. There are benefits and drawbacks to all products.
Make sure your money is making you money – check where your money is currently held and compare with savings accounts with potentially higher interest rates, or even investing your money if you don’t need access to it in the short term.
Plan how much you can save between now and when you retire.
All these steps are crucial in financial planning, but it can be complex, and it’s not always easy to come up with a plan on your own, especially if you’re not money–minded!
Financial planning with Reeves
If you think you might need a hand with your financial planning for retirement, then that’s what we do here at Reeves. Simply reach out to us today and a member of our team will take you through our free financial review process. This process allows you to see exactly what you have, how your finances are forecasted to cover your retirement, and come up with a plan which works for you to meet your retirement goals!
