At some point in life, you might have planned or have had thoughts of a beautiful retirement with holidays in the Bahamas, world tours, cruising the seas, or a grand villa out in the countryside.
Such dreams really does push one to work hard, but in order to achieve them; a perfect retirement plan is vital. And the earlier one starts planning, the better one reaps the fruits of retirement. If you haven’t started planning for your retirement, do not worry; there are many different ways to increase your retirement savings. It also vastly depends on how grand or simple you want to live your life in the post-retirement.
Below are some tips to boost your retirement savings, irrespective of the stage you are in
The benefits of a pension go farther than we generally consider it to be. It is a tax-free income of money which you save with your employer or government and collect at the time of your retirement. You can either collect all of your pension money at the time of your retirement or exchange it for the annuity with an insurance company; wherein you receive money on periodic intervals.
If you live in the UK, you are automatically enrolled in the Workplace pension provided by your employer; where small amounts of salary are deducted and put into the pension scheme. And if you are nearing retirement without debt, mortgages, or loans on your shoulders; you can boost your pension amount by putting more into the pension scheme.
When you are in the early days of earning or if debts pile up, the thought of quitting the pension scheme might cross your mind. Do not go for it until and unless you have no other option and have consulted a professional advisor for the same. In case if you do quit the pension scheme for financial reasons, try and resume it as soon as you are able to.
Debt is a common burden and anyone can clear it off with careful planning and effective management. However, carrying a debt in your post-retirement phase can be quite a hefty burden to bear; with lower income and almost the same expenditure being the norm post-retirement. And any plans for holidays and trips will seem a distant dream with these debts on your shoulders. So, it is important to be intentional in clearing debts, loans or mortgages before you reach retirement age.
Your daily budget will likely change once you retire. You will be able to cut down on some costs such as daily travel and meals out (especially lunches during the working week). Additionally, if planned well, you would have cleared most debts before entering retirement. So, your everyday and monthly expenses might come down. This is great if there is no or little change to your income, however, chances are that your monthly income is likely to also decrease at this stage.
Irrespective of age, It is advisable to have a budget. You can include simple things into the budgets, such as estimated costs of trips and holidays you’d like to take, gifts for family members etc; you should also include your income details such as savings and any returns on investments. By doing so, you will be able to get an average idea of your budget and prioritise your expenditure accordingly.
Pensions can’t be the only source of retirement money. Because, in general, you may pay around 2 – 5% of your income for pensions and by the time you retire that income may be just about enough to meet your monthly expenses for the rest of your life. In addition, statistics show that a person needs nearly 2/3 of pre-retirement salary to lead a comfortable and happy life.
On the other hand, the basic cost of living in the UK for a retired person is anywhere between £10,000 – £12,000 per annum excluding luxuries such as vacations or holidays. Add holidays, home improvements, shopping etc to this and it could go up to £25,000 or higher.
So, in addition to pension schemes, it is always advisable to have other sources of income like investments or side-earnings to cover your monthly expenditures plus a little extra to meet other expenses. Read this article to learn more about various types of investments.
When you are near retirement or have retired you have plenty of free time at hand to spend time with family, travel, rest, read, and pursue various hobbies. In such cases, you can try to put your hobbies or past-time skills into making money. It could be anything from showing off your cooking skills online or teaching kids or youngsters whatever you are good at.
Insurance is one of the best shields to guard your life and your belongings irrespective of your age or lifestyle. Especially if you buy health or life insurance plans, it will help you get back without spending much from your retirement savings or depending on anyone else for the same.
You work really hard all your life, give the best to your families, and at the end, retirement is one way to reward yourself. It is a gift that you present to yourself for all that you’ve done and had to endure all your life. So make sure that you make the most of it, and start working towards being able to make every desire and dream a reality.