In life a lot can change in just a few short years. As a general rule, it is important to regularly review our goals and objectives as our lives and careers evolve over time. The same strategy is true for our retirement plans. After all, due to medical advancements people are generally living longer. It is not unfeasible that someone could expect to live for 30 years or more after they retire. We must also be aware of how important life events can impact our retirement plans. Raising a family, taking a career break, moving house, marriage or divorce and changes to health can all significantly impact our plans, therefore reviewing your retirement plans at these crucial stages in life is key.
Let’s explore some of the key questions to ask yourself to review your retirement plans effectively. If you are looking for help, contact us for a complimentary initial discussion.
Am I on track?
As our careers develop and progress, we would likely expect our earnings to also change over our working lives. It is important to ensure that our pension contributions are regularly reviewed to reflect these changes and to keep pace with your retirement objectives. Should your earnings increase over the years, it is likely that your standard of living, and the cost associated with this, will increase. It is important to factor this into your thought process when thinking about how much income you will need in your retirement.
Have my plans changed?
As we progress through the stages of life, it is likely that our plans will need to be adjusted, like anything else in life. Our aspirations at the age of 60 are, after all, very different from those we had when we were 20 years old. Regular reviews of our objectives and plans are key to ensure our strategy remains relevant.
Periodically resetting our expectations with regards to retirement planning is also key. We may develop additional responsibilities as we get older such as supporting our children through university, helping them get on the property ladder or caring for an elderly relative such as a parent or grandparent. Accommodating these extra resources may mean we have to modify our own retirement plans.
We should also take time to regularly review our investment strategy. Are we planning on retiring earlier or later than expected? Is our investment performing as expected? Is it suitable for our revised retirement age? Is the diversification of assets appropriate for our new timeframe?
It is also important that we factor debt into our retirement plans. Will we have paid our mortgage off before we retire? Have our retirement plans factored in the repayment of any debts, such as credit cards or loans?
Health is also a major factor that can impact our retirement plans. Any one of us can suffer from poor health at any time of our lives. This may require us to push our retirement forward, or to delay retirement in order to continue to support a loved one.
All of these points need to be considered when reviewing your retirement plans. Remember that you do not have to retire at a set age anymore. We can continue to grow our retirement pots until we are finally ready to put our retirement plans into action.
Is there a cost in delaying my pension contributions?
There are may reasons why we may consider delaying contributing towards our retirement savings. Ultimately this will mean having to catch up on these missed contributions in later life to keep our retirement plans on track. As we will see, delaying contributions and catching up down the road is often far more expensive in the long run.
To help illustrate this, the below shows the effect on retirement savings where £3,000 is saved per year and we assume a return of 7% per annum. This shows savings over a 30-year period against a delay of 1 and 5 years.
You will see here that a delay of just one year makes a difference of over £22,000 whilst a five-year delay makes a difference of over £100,000.
Whilst this is a very basic example, the principles remain the same – the cost of delaying contributions into your retirement savings can have significant impact on your finances in later life. At Taylor Financial Management we can help you find the best way of managing your retirement plan and address any shortfalls.
Email: hello@taylorwealth.co.uk
Tel: 01245 520 001
The above figures are an example and are not guaranteed, they are not minimum and maximum amounts.
A pension is a long-term investment, any advice or considerations are personal to each individual’s circumstances. The value of your investment and the income from it may go down as well as up.
Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation.
The value of investments may go down as well as up and you may get back less than you invest. Past performance is not a reliable indicator of future performance.
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