Ten Tips for a Comfortable Retirement!

24 October 2018

Here’s how to plan your retirement in a snapshot!

1. Consider your retirement income - without a goal/target, you won’t be able to measure your progress.
2. Start saving early – the best time to start is at age 18, the second-best time is now! A crude rule of thumb to achieve a reasonable sum/income is to take your current age, halve it, convert it into a percentage - and that is the percentage of your income that you should be investing on a monthly/regular basis.  Hence, why you are better off starting at age 18 and not 50!
3. Maximise pension contributions – In certain circumstances, you can obtain up to 60% tax relief on contributions, therefore an Investment of £20,000 could cost you as little as £8,000.
4. Maximise ISA allowances – you have an annual allowance of £20,000, a really good way of investing which offers some added benefits over and above a pension, in terms of accessing the funds.
5. Avoid debt – debt can be a drain on your overall wealth.  If you have debt, make it your number 1 priority to remove it asap.
6. Avoid bad decisions – ie. when the stock markets are uncertain, and media are doom and gloom, it is critical to ignore the noise and focus on the horizon.  Remember why you invested in the first place – for the long term, not for March 2019 when Brexit kicks in!
7. Minimise cash – cash is losing value with inflation and will erode your wealth.  It is important to hold some cash, but only as an emergency fund.
8. Pay yourself before others – Warren Buffett (a quite successful businessman!!) says ‘Do not save what is left after spending; instead spend what is left after saving.’  Many people spend what they earn, the more they earn, the more they spend.  Set up a standing order, you will be amazed at how comfortable you become with your new budget.  It won’t take long for funds to build up for that dream holiday/new car, tax bill!
9. Overpay the mortgage – making a small overpayment can have a dramatic effect on the term of your mortgage. e.g. for a £300,000 mortgage over 25 years, assuming an interest rate of 2%, if you overpay by just £200 per month, this can reduce your mortgage term by 4 years!

10. Use a Financial Adviser!  If you want peace of mind through guidance on all of the above plus more, then speak with a Financial Adviser before it’s too late – read here to understand the benefits!