We’re all living longer. In fact, the average life expectancy of a UK resident is 81 years, according to the World Health Organisation (2013). It should be fantastic news, right?
However, you may notice some people’s eyes glaze over with fear at thought of a longer retirement. That’s because, well, long retirement is only a blessing if you can afford to see yourself through it to the very end. Unfortunately, that doesn’t seem to be the case for a lot of people.
The New Working Order
LV= recently published a study that showed only one in three people at retirement age were not working at all.
The study, which was conducted with over 1,000 participants aged over 60 years, revealed that most people eligible for retirement were actually working part-time, or were taking up voluntary work. One in six people returned to work after retiring in order to make ends meet.
It may seem a grim prospect, but if you take the right steps, you can ensure that you don’t meet the same fate.
Retirement Starts in Your Twenties
Well, no, of course it doesn’t actually start in your twenties (unless you’re a young entrepreneur who can afford it), but planning for retirement does start here. Because the concept of retirement remains something of an abstract entity until it’s right there on your doorstep, many people – especially those in their twenties – sort of just turn around and pretend it isn’t there.
Don’t worry; you don’t have to put away everything your earn into a pot you’ll only spend 45 years later. Start with small monthly amounts in your early twenties when you’re just starting out on the career ladder.
Saving for things like holidays and a mortgage deposit teaches you the habit of saving before you get enough money to see that pot significantly increase in size. They’re sort of like the baby-steps towards the far larger savings quest of your retirement fund.
Understandably, not everyone wants to slave away to earn money they won’t see until they’re too old to really enjoy it while sacrificing their short-term quality of life; heck, some people simply can’t afford to.
So how can you turn this on its head? You have to be tactical. When you hit your fifties, it’s time to consider some options that can see you accessing a lot of money in a relatively short period of time.
Some people access their pension funds prior to retirement in order to use them for investment opportunities. If done so with the proper advice, it can provide a passive income during retirement, allowing you to earn without having to work.
Another option is equity release. This is a great option for anyone who has poured a lot of investment into their home and doesn’t want the hassle of moving during retirement, as it can provide a large sum of money to help top up your pension.
Downsizing, however, is a fantastic method for some people. Hopefully, by the time you’ve hit your sixties, the kids will have flown the nest and you’ll have paid off the mortgage, meaning that you can sell your old home for a cosy new one and pocket the difference.
Retirement doesn’t have to remain that bleak grey patch at the end of your timeline. In fact, it can be a time when you can utilise the freedom you have from the 9 to 5 grind to go and see the world in your own time. If you plan them right, those years can be as good as you imagined.
The above post was contributed by Angela from ‘Sell Pension’ detailing some important considerations when preparing for retirement.