There has been plenty of news about the changes to pension rules and how people will have much greater freedom when it comes to accessing their pension funds.
Whilst these changes are welcomed by most, it still doesn’t solve the main problem – which is how can you afford to retire in the first place?
What’s the problem?
Problem #1. We are all living longer. Estimates say the number of 90-year-olds will more than treble by 2037. So the odds are that your retirement is likely to last quite a while.
Problem #2. Inflation. Lets say inflation runs at 3.5% per year. This means that the value of your savings will reduce by half over 20 years. This is quite a big deal.
So, what do you do about it? How can you actually get to retire in today’s world?
1. Know your number
The key to properly planning for retirement is knowing how much you need to save up in the first place – your ‘number’ – how big does the retirement pot need to be? If you want some help working out ‘your number’, then get in touch. You need to factor in things like inflation and how you will invest in retirement.
2. Have a master plan
Once you know what your number is, you can start making a plan. You need to work out HOW you are going to hit your magic number. Retirement planning isn’t just about pensions but pensions are a great solution for many people.
3. Get the taxman to help
You’d be surprised how much easier it is to achieve your target if you let the taxman help you out. That is why pensions are a decent way to save – the tax reliefs on these are second-to-none. ISAs are also a no-brainer for most, as pretty much all of the growth is tax-free and you can also generate tax-free income in retirement too. Using assets that don’t have tax-breaks like these can work but they just need to work that much harder.
4. Think outside the box
We work with many business owners who aren’t aware of how planning for their retirement can also help to grow their business. There are specialist pension arrangements that can do things like purchase commercial property or provide loanbacks to the business owners company.
To find out more, you can contact one of the Wow Financial Planners.
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