Having a pension is a good start, but various other components are involved in planning your retirement. What’s excellent about retirement planning is that you can be as creative as you want. You may be close to retiring, or you might have several decades before you stop working.
Regardless of when you will retire, you can do plenty of things to ensure you are best prepared as possible. Let’s have a look at six retirement tips for 2021.
1. Clear Your Debts
Having debt is one of the most damaging threats to your finances, so you should endeavour to clear them as soon as possible. Your income is likely to be reduced as you retire, so you must eliminate your debts before you retire.
Clearing your debts is the key to living and affordable retirement and ultimately achieving financial freedom. Therefore, wiping out your debts needs to be your main priority in preparing for your retirement. Once you have paid off all of your existing debts, you can save more money during your remaining working years to fund your retirement.
When it comes to prioritising your debts, you should pay off your debts with the highest interest rates. The reason for prioritising this way is that paying more in interest slows the pace of reducing the capital loan amount.
2. Become Mortgage Free
Your mortgage may still be classed as a debt, but it is considerably different from consumer debt. Your mortgage may be essential for you to have a home, and it is likely to be for a considerable amount and over the long term. However, you should still set yourself a goal of becoming mortgage-free before you retire. Knowing that you own your home outright will provide you with tremendous satisfaction and a sense of relief that you no longer have the burden of a mortgage.
3. Think About Your Investments
Once you have dealt with your debts and mortgage, you can start to think more positively about your money and investments. Having some investments is crucial for your retirement plans. If your retirement is imminent, you may already have some investments in place, which could include the following:• Stocks and shares.• Pension scheme.• Regular savings. • National Insurance contributions to your State Pension.
If your retirement is many years away, and you haven’t yet started to invest for your retirement, you should consider starting immediately.
4. Do Some Financial Planning
Making a comprehensive financial plan will help you combine these planning tips and prepare you better for your retirement. Creating a realistic budget and recording your expenses is a good start as it will help you stay out of debt, maintain your standard of living, and give you clarity over your investments.
When making your plan, you should be completely honest with yourself. If there are certain luxuries that you cannot do without, then you need to include these in your budget. Similarly, if you want to travel, ensure that you budget for this too. Realistic and honest budgeting will help you maintain the retirement lifestyle you desire.
5. Plan On Working Part-Time
Many people get excited about the prospect of retiring and not having to work. However, the reality is often different, and you may well find that working part-time is a good transition from full-time work to complete retirement, both mentally and financially.
Working part-time allows you to try something new. Having freed yourself from the burden of full-time work will enable you to devote your time to making money from your hobby or something else you’ve wanted to try.
6. Get Mentally Prepared
Even with all the planning and preparations in the world, you are likely to find your retirement to be a completely new experience. You need to mentally prepare for the different pace of life and the shift from full-time work.
No one knows precisely how they’ll feel when they retire, so you should consider all the changes that you might go through. Having considered the potential changes, you will be less surprised when the changes come around. It is crucial that you accept and adapt to these changes rather than fighting them.
Planning for retirement is something that everyone needs to do. If you make good plans, your retirement years can be fulfilling and comfortable. Hopefully, these six retirement tips for 2021 will help you achieve the retirement you desire and deserve. Before looking at options for your pension, consider using a regulated financial adviser like Portafina or, view the info at Pension Wise.