How to get your retirement back on track
The uncertainty caused by the pandemic was particularly unwelcome news for people approaching retirement, but there are ways to strengthen your financial plans.
For millions of older workers, who can see retirement approaching on the horizon, recent pension provider statements might not have made encouraging reading.
At the beginnings of the Covid pandemic, nine out of 10 pension funds experienced a loss. (1) The situation has improved as stock markets subsequently recovered from the initial shocks. But people’s day-to-day money situation has also taken a hit, with November 2020 research by LV= finding 40% of people aged 55-64 (2) say their finances were worse than three months earlier.
One in four of this age group has seen a fall in income from work, which could reduce how much they can save towards retirement. Especially as only 3% of 55-64s are putting any spare money they have into a pension.
Start feeling more confident
If you’re feeling concerned about your ability to retire, you’re in good company. Schroders research in November found 41% of global investors (3) are worried they won’t have enough money to retire. 43% of people aged 51-70 are anxious their retirement income won’t prove enough.
So, what could you do to start feeling more confident? Well, the first thing is to start seriously looking at your retirement ambitions and how much money you’re going to need.
For example, it’s worth looking at your current spending habits and how it might change. After that, you can think about the fun stuff you’ll want to do in retirement and the costs that may be involved.
How do your plans stack up?
With a clearer idea of your outgoings, it’s time to look at the health of your savings, investments and pensions – and how much income they could provide you. There’s also the state pension to factor in.
If you’ve changed jobs over your career, you might have amassed several pension pots that you’ve forgotten all about – these could boost your income. January 2021 research from Interactive Investor (4) found one in eight of us don’t know how many workplace pensions we have.
Any gap between your likely spending needs and the level of savings is the key area to address. It’s important, to also remember that your retirement will hopefully last for many years, and your needs might change over time. So, your retirement provisions need to last you.
Speak to a professional
With so much at stake, getting an expert to help you plan retirement can make a real difference. That’s why a lot of people speak to a financial advisor in the final few years before retiring. They have the know-how to review your plans and forecast your retirement spending needs, so you can get a more accurate picture of where you stand.
As financial advisors we are able to advise you on making stronger plans and help you develop a suitable strategy for transitioning into retirement, giving you the peace of mind you deserve!
The value of your investment can go down as well as up, and you may not get back the full amount invested. Investments do not include the same security of capital which is afforded with a deposit account.