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Running out of money in retirement is one of the biggest concerns for many retirees. Managing your retirement income will give you a better opportunity of ensuring you have enough money to enjoy the next stage of your life in financial comfort.
But what do you need to save? This is a difficult one as it will always depend on the plans you have in mind for your retirement. However, if you’ve spent years planning for it, you should make sure you’re playing an active role in monitoring your investments and your retirement income. This will give you the best chance of understanding what’s happening with your finances and identify if any changes are needed with the aim of maintaining your living standards once you do retire.
Depending on when you need your income, it’s a good idea to try and make sure your investments can pay you a regular income that’s aligned with what you’ll need in retirement. Whether that’s monthly, quarterly, or yearly is up to you.
Get a benefits check
Don’t assume you’re not entitled to any benefits. Even if you think you’re getting everything you are entitled to, it still makes sense to check. Any benefits you’re entitled to will contribute to your overall income, and in the future could help to pay for care costs, day to day bills or to maintain your independence.
Trace lost money
You may have money stored away in lost bank accounts, pensions, or premium bonds if you’ve changed your name or address several times. Make sure you’re receiving all you’re entitled too.
Regardless of your financial circumstances, you could be eligible for a reduction to the amount you pay or could even be exempt.
Defer your state pension
If you can afford to, deferring claiming your state pension could boost the amount you get when you finally come to claim. You may end up better off if you have a long retirement. If you plan to work past your pension age you could also pay less tax overall if you defer your State Pension until your wages have stopped.
Reducing your outgoings
Whether you’re in the run-up to retirement or already claiming your pension, cutting back on some items could make a big difference to your budget. To start, draw up a list of your income or expected income and your outgoings. You’ll then see if there’s a gap and identify where you can cut back.
Preparing for an enjoyable and secure retirement involves so much more than just your pension:
Some points for you to consider:
1. Make sure you have a plan and ask yourself some key questions: When will I start needing to take income in retirement? What do I want to do once I retire?
2. It’s important to understand where your retirement income will come from and how long you will need it to last for.
3. Calculate how much income you will require, make a budget, and then keep to it.
4. Don’t overlook the impact of inflation, take steps to protect yourself against the impact of rising prices during your retirement. Remember your outgoings are likely to vary year by year, so remaining flexible will be crucial.
5. Minimise the amount of tax you pay and look at different ways of reducing your tax bill.
6. Be aware of other commitments, for example, you may want to help your children or grandchildren financially at some stage – possibly with school or university fees, wedding costs or helping them get on the housing ladder.
7. Have an emergency income fund and don’t have all your financial eggs in one basket.
Please note: This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
A pension is a long-term investment. The fund value may fluctuate and can go down as well as up, which would have an impact on the level of pension benefits available. Your pension income could also be affected by interest rates at the time you take your benefits.