Often, it can feel like our work is without end. Even with the best possible career, great benefits and regular holidays, it is only natural to daydream about better days after work – real financial freedom, days of lazing in the sunshine, without care or responsibility, and with a great big pile of retirement cash to spend as you please.
Retirement is a near-guarantee, but the best possible retirement isn’t by any means. A luxurious retirement is not made on State Pension alone; getting to a good quality of retirement living requires work, and sooner rather than later.
Setting yourself for retirement is, fundamentally, an act of financial planning. Whatever kind of life you choose to life after finishing work, it will need funding almost entirely by money you’ll be generating now. As such, it would behove you to take a look at your existing financial situation, and evaluate exactly how ready you are for retirement – if not immediately, then with your existing financial structure in place.
It is worth remembering here that there are unique financial products available to those approaching retirement age, beyond the literal products of pension plans and LISAs (more on which shortly). For example, if you own property, you could use an equity release calculator to discover how much of its value you could receive via a lifetime mortgage. This could affect inheritance plans, but would also be a useful route to freeing up cash for more leisurely pursuits.
Financial freedom: Creating a budget
Unless you are in the rare and uniquely fortunate situation of knowing you are completely and utterly financially fixed for retirement, you will need to create some form of budget to describe your present savings goals and future retirement spending. As things stand, how much do you stand to receive as a retiree from your existing systems – pension plans, savings accounts, investments, etc?
Utilising this information, you can set out a realistic budget that ensures that money stretches out for the projected length of your retired life. If your weekly retirement income doesn’t quite match with your ideal quality of life, this is a clue that something needs to change in the short term.
With regard to the short term, there are a number of ways in which you can seek to maximise your savings for a more bountiful retirement pot. The obvious choice is to allocate as much of your salary as possible to your workplace pension scheme, in order to benefit from pension tax relief and increased employer/government contributions.
There are, though, other routes to maximising your retirement savings. For example, LISAs, or Lifetime ISAs, allow you to generate a 25% government-subsidised return on deposits up to £4000 annually. ETFs, invested in via a Stocks and Shares ISA, give you tax-free capital gains at a stable rate with relatively low risk. Together, this diverse array of financial options can give you robust financial security for the retirement you deserve.