Monday, April 15, 2024

How to Stay Money-Savvy During Retirement

Although you might think that retirement is the time for beaches, sun and too much gin, think again. Retirement is the time in which you should be reaping the rewards of your hard work, and yet many people fail to prepare for it. If you are looking for a relaxing and luxurious retirement, read on to discover the best tips to stay money-savvy during retirement.

The Dos

Save: If your parents always nagged you to put money aside for a rainy day, now is the best time to do so. Saving for longer periods of time will allow you to take advantage of compound interest, which can drastically increase the money in your account. It also ensures that you will be able to save up more money while feeling less impact on your bank account.

Enroll: Auto-enrollment schemes mean that employers must pay a proportion of your salary between £5,876 and £45,00 into your pension scheme. Employers only pay 1% of tax on this, while you pay 0.2% on your own contributions, meaning that money can build up extremely quickly when taking advantage of these schemes.

Track: Although pension participation is at a record high, many people leave their accounts without input or tracking for many years, believing that their pension will have a steady growth rate. However, you should ensure that your investment has been worthwhile by tracking your pension throughout your life. This will then reduce the chance of nasty shocks along the line.

Read More: You should read as much about your pension as possible, and resources on Portafina’s social media at Portafina’s Facebook, @portafina_uk, LinkedIn and YouTube can help you to do that. If you are searching for one-on-one advice, you can speak to a Portafina advisor by visiting their website.

The Don’ts

Equity: 441,227 people, according to the Equity Release Council, have released equity since 1992. Many of these have been attempts to make up for lack of saving throughout their lifetimes and an attempt to gain funds through retirement. However, there are cons to Equity release that can seriously damage your house value and your inheritance.

Annuity: 84% of retirees want an annuity, and many of these people get annuities without prior research into the best deals on the market. If you do decide to opt for an annuity, you should look at the annuities available to purchase on the open market, as 80% of purchasers could have got a better deal looking to buy from here.

State Pensions: Many people rely on state pensions during retirement. However, you must have 35 qualifying years to get this, and the release age increases alongside life expectancy. This can leave you without a state pension for much of your retirement, and so you should always have a back-up plan where possible and invest in a private pension to help you to live the high life through your retirement.

Disclaimer: The information above is not financial advice. For any financial decisions you need to make, please talk to a qualified financial advisor before you commit to a decision.

Claire James
Claire James
Claire is an accounts manager at Fire Digital UK, an online publishing and content marketing company based in the North West.

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