When will you retire?
It's a serious question - one I asked myself a while ago.
I'm asking it as I expect most will reply off the cuff with a number like 65, or State Pension Age, without knowing how realistic that number is or even if it's achievable. I'm even more concerned for those under 40 years old who may have given it no consideration at all!
Try this quick quiz (Yes or No answers only):
- Do you know what assets you currently have (eg primary house, pension fund, savings, shares) and what they are worth?
- Do you know what your state pension will be and when you will be able to take it
- Have you considered what your basic outgoings will be without a mortgage, work expenses and other big outgoings (eg children's education)?
- Do you known what extras you might want to have in retirement (eg holiday home, multiple holidays throughout the year)?
- Do you know how much you are contributing to retirement savings monthly or yearly (eg regular pension contributions, savings or investments)
If you answered "No" to any of the questions, or you answered "Yes" based upon guesswork and not fact, then you should take the time and try to answer them seriously. You might be pleasantly surprised or at least informed on what actions you might need to take.
After all retirement is like most big investments you will make. If you wanted to buy a car, a house, save for a wedding, or have kids - it's likely you'll have considered: How much will it cost; Can you afford it just now (or compromise so you can); or How much do I need to save so I can afford it. At a minimum you'll have considered the last question and maximised what you are saving. There are many ways to do this: Company pension schemes (where you're employer and the tax man adds to whatever you save); Personal pensions (where you can get the tax man to contribute); Share save schemes (which can grow your savings faster and can also be tax efficient).
A number of years ago I looked at these questions and made some plans. It meant some changes to how I used my income and even some sacrifices - however the goal was to stop working before 60 and have enough to live comfortably. Each year I revisited the answers to the questions, compared the assets versus expenditure and when the balance was right made my move and took early retirement. No - I've not got millions in savings or pensions and I haven't won the lottery, I just have given consideration to what I have, what I want out of retirement and what I can afford
By the way - if you answered "Yes" to all of the questions, then like me you've probably done the thinking and can answer the primary question "When will you retire?". If so, do you have any words of wisdom to share with others?
Comments
Post a Comment