Whether you are hoping to leave your job quite early or just preparing for the time when you can finally put off your morning alarm for good, retirement is always something to anticipate. It’s rather unfortunate that most of us are not fully prepared for this time of our lives, and even as a nation, we are still not prepared enough. If you want to enjoy and make good use of your freedom after retirement, then you must ensure that you have enough savings and a good pension in place.
In this article, we’ll highlight some common mistakes people make while preparing for their retirement and ways you can avoid making these mistakes.
Retirement Planning Mistakes
1. Not saving until later
This is one of the most common mistakes people make about a pension. Believing that it can never be too late to start saving, forgetting that the earlier you start, the more you save up. If you wait to save later, you will be under the pressure of putting away more per month if you must end up with a good amount.
2. Thinking the state pension will be enough
It is good to have a State Pension system in the UK, but it is not enough to live on during retirement. Apart from the fact that you cannot depend on your State Pension, you won’t be eligible for the money until you are 65, and the pension age keeps increasing every year.
3. Under estimating the costs of retirement
Believing you can live off your State Pension means that you have not carefully calculated the amount of money you’ll need to fund your retirement, and this is the worst mistake anyone can make. You might have to sell off your properties, assets or even return to work if you don’t do your math well. You have to consider the standard of living you want in retirement and calculate how much you will need to keep up.
4. Depending on property only
Investing in property alone is not such a good idea as you leave your savings and future at the mercy of the property market. Yes, the prices may increase continuously for many years, but what happens if the market crashes? You need to consider all these factors and make better plans for your retirement fund.
5. Forgetting your workplace pensions
Not knowing about the pension providers from your workplace pension, means you won’t know how your pensions are doing, and you might as well lose the money or forget it was ever in place. In the long-term, the risk of forgetting about where you have your pension is high compared to the short-term, and you can lose out on all of it. You should never forget your pension pots because they can either be doing poorly, or the hidden charges can be reducing your pension. The good thing is, we can connect you to a regulated adviser who may help you find your workplace pensions, click here to learn more.
Five Retirement Planning Tips
- You don’t have to be rich to save for retirement. The amount you save from your wages, whether it be small or large, will go a long way in the future, plus you might get tax relief from the government. So it pays to save even the little you have.
- Ensure that you are eligible for the full State Pension by paying for the National Insurance contributions for at least 35 years when working. But if you haven’t worked for that long, you can obtain National Insurance credits for the times you took care of children or the elderly.
- A pension calculator is very useful when figuring out how much you’ll need to get your basic needs or the luxurious life you’ve dreamed of for retirement.
- Do not put your eggs in one basket; diversify your investment. Yes, investing in real estate is good, but you must invest in other things to protect your assets and reduce the chances of running at a loss.
- Always keep all the paperwork from your old workplace, as this will make tracking down pensions easier.