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Are You Planning to Retire in 2024?

03/07/2024 Newsletter, Blog

Are You Planning to Retire in 2024?


Many people aim for a wonderful retirement, hoping it will unfold smoothly without major issues. However, retirement plans always face challenges, whether it’s market volatility, healthcare affordability, or the risks posed by inflation. Additionally, you’re likely to spend decades on a fixed income, lacking the financial flexibility you previously enjoyed, so planning for this is required! It’s crucial to be thoroughly prepared before retiring and to accommodate potential surprises in your plans.


Are You Planning to Retire Soon? Here are Our Top Tips


Review Your Retirement Financial Plan


A successful retirement begins with a solid plan. Before you leave the security of a steady income, ensure your plan is as robust as possible. Create a retirement plan tailored to your goals, considering factors like the cost of living and medical expenses. Paying off debt before retirement can provide greater financial flexibility.


If you already have a plan, review it to ensure it is up to date with the latest figures and estimates. Revisit your retirement income plan to confirm that your income will exceed expenses, reducing the risk of having to return to work or, worse, running out of money.


You might be retired for 20, 30, or more years. Inflation will increase your living costs, but your retirement income may not rise as quickly. Consult a specialist to evaluate your situation. A financial adviser can help you avoid common mistakes, such as incorrect asset allocation early in your retirement or insufficient income.


Prepare for the Impact of Inflation


Recent years have demonstrated that inflation can surge unexpectedly and severely impact those who are unprepared. Inflation can devastate a financial plan heavily reliant on fixed-income investments like bonds. If you must spend all your retirement income and cannot reinvest any, inflation will erode your purchasing power over time, making your pounds worth much less.


Your financial plan should account for inflation and ideally include growth assets, allowing your income to increase over time so you aren’t left with the same income as ten years ago. Ensure your financial plan is not too conservative and enables your money to grow over the extended retirement period. Otherwise, inflation may diminish your income.


Protect Your Assets from the Market


While living off investment earnings without dipping into cash savings would be ideal, this is unlikely for most retirees. Therefore, it’s important to ensure that any income you’ll need in the near future (at least over the next year) is shielded from market fluctuations. You shouldn’t rely on the market being up to sell stocks for funding your expenses, as market history has illustrated.


Shift Your Perspective from Saving to Spending


You’ve spent your life working and saving, but now that you’re retiring, it’s time to shift to a spending mentality. Before retirement, spending what we have saved feels ‘bad,’ but in retirement, it’s the opposite. It’s acceptable to spend and not save! Although this seems straightforward, it’s a challenging emotional adjustment for many because it feels like breaking the rules.


Re-establish Your Purpose


A successful retirement isn’t solely about getting the financial details right, though they certainly help. It also involves finding a new purpose outside the working world, perhaps with new friends or in a different context altogether.


We’ve had a purpose during each life phase, and retirement is no different. Retirement offers unprecedented freedom and flexibility. You can even change your purpose whenever you wish. Without purpose, you may find yourself dreading your free days and feeling bored. Find a purpose and live retirement intentionally. It enhances your health, vitality, and happiness.


Plan to Stay on Top of Finances in Retirement


You might think that once you’re retired with a solid financial plan, you can relax, but managing your finances remains crucial. Given that many live on a fixed income, staying on top of your finances and how changes in the law may affect them is even more important. Be proactive with your retirement and stay informed about what applies to you and your household.


Setting up a retirement plan can be daunting for many, especially if they think they don’t have enough to retire or retire as they wish. However, you may have more than you realise. Even if you don’t have enough, you might adjust your plan to maximise your savings.  We recommend you speak to a financial advisor about your personal situation to help plan.

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