You may already have an idea of when you want to retire.
It could be when you reach a certain age, or maybe you and your partner are planning to stop work at the same time.
Even if you don’t yet know, you’ve probably given it some thought, even in very vague terms.
Yet, while having an idea and aspiration is one thing, being able to actually do it is another issue entirely.
It’s important to take steps to avoid reaching a time when you want to stop working, only to find that doing so and enjoying retirement aren’t possible for one reason or another.
So, read six simple steps you can take to help you fulfil your dream of retiring when you want.
1. Have a target retirement date in mind
A good place to start is to have a target retirement age in your mind to work towards.
Obviously, you don’t have to stick to it. Your circumstances may change in a way that will allow you to retire comfortably before you had planned. Likewise, you may be perfectly happy working beyond the time you’d previously planned to stop.
Even so, having a date in mind will provide you with some useful focus when it comes to your planning.
There are some key ages you will need to be aware of when it comes to income provision, and that could have a bearing on your choice.
For example, you can’t access your UK pension fund until you reach age 55, rising to 57 in 2028. Likewise, if you have an accrued super fund in Australia, you will normally not be able to draw from this until you have met a condition of release, which is typically from age 60.
You will also want to consider certain events that will be personal to you when you’re deciding when you will want to retire. One of these may be when your mortgage will be paid off, as you will probably not want this commitment as a burden on your finances when you are no longer earning a salary.
2. Know what you want to do once you stop working
As well as having an idea of when you want to retire, having a strong sense of what you actually want to do when you are no longer working will also be useful when it comes to planning ahead.
For example, actual plans of the countries you want to visit or the number of times you want to play golf each week will be a much stronger motivating factor than simply thinking that retiring will mean that you’ll have more time to yourself.
Having this motivation will help ensure you maintain the discipline to stay on track with your savings plans. You will want to ensure you have the finances in place to fund the retirement you’re looking forward to.
Clearly, there’s nothing wrong with wanting to look forward to a time when you are no longer tied to a nine-to-five work regime and start to enjoy a life of leisure. But some realistic objectives can help you stay focused on your goals.
3. Have an idea of the income you will need
With an outline plan of when you will retire and what you want to do, the next important step is to work out how much income you think you’ll need.
This will then give you an idea as to how much you need to save to ensure you’ll be able to live comfortably without money worries. You can then put plans in place to have that sum available at your chosen age.
The Pensions and Lifetime Savings Association has published broad guidelines on the annual income you’ll need for certain lifestyles in retirement.
Clearly, these are only a guide, but they do give you a decent idea of what your target fund should look like.
Knowing the size of the fund you will need can help guide your investment planning. It can give you a clear idea of the amount you will need to save each month, and the amount of risk you will need to accept when it comes to selecting the funds for your investment portfolio.
4. Keep your debt to a minimum
There is little point in saving regularly if your income is simply being eaten away each month through the cost of repaying expensive debt.
As with your mortgage, you will want to try and avoid having a credit-card millstone around your neck in retirement if you can.
Because of this, it can be sensible to ensure that you are as debt-free as possible as you approach retirement.
Clearing debt also provides the added benefit of freeing up funds to allocate to your retirement pot, as well as reducing your monthly outgoings.
5. Don’t think you have to retire all at once
Even with a target age in mind, you don’t necessarily have to stop work one day and start your retirement the next.
As you have read, if you are enjoying working, you can carry on, even if you have accrued enough wealth to fund a comfortable retirement.
For one thing, working because you want to rather than because you have to can give you valuable peace of mind. It will also mean that you are still earning a salary and adding to your retirement fund.
If you don’t want to work full-time, you may want to consider semi-retiring. This could involve:
- Reducing your hours in your current job
- Working on a self-employed consultancy basis
- Trying something completely different, perhaps closer to home.
This will mean that you can start to enjoy extra time to yourself, while avoiding losing the mental challenge of working as well as the associated social network.
Importantly, it will also mean that when the time comes to stop work completely, you will be in a better position to mentally adapt to the change in your lifestyle.
6. Get expert advice
Perhaps the most important step to securing the retirement you deserve, when you want it, is seeking guidance from a financial professional.
A financial planner can help you put your plan together and ensure that you’re saving enough each month and that you have the right investment strategy to meet your goals.
Perhaps most importantly, they will then help you regularly review your plans so that you stay on track, while also recommending changes you may need to make as appropriate.
Get in touch
If you would like to discuss your own retirement plans to ensure you enjoy the retirement you deserve, please get in touch with us.
Please note
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
This article is for information only, it does not take into account your personal objectives, financial situation, or needs. Please do not solely rely on anything you have read in this article and ensure that you conduct your own research to ensure any actions you may take are suitable for your circumstances.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
All contents are based on our understanding of HMRC and ATO legislation, which is subject to change.