Planning for retirement is not the sexiest thing on the planet but it is one of the most important decisions you will have to make for your future. When I was in my 20s, I did not think much about retirement and quite honestly thought to myself, ‘I am too young to start planning for retirement‘. But with the rise of the F.I.R.E movement and recently understanding how much money I would receive from the government when I qualify for retirement, it was depressing enough that I decided to do something about it. I enrolled in company pension schemes, diversified my investment portfolio and increased my savings.
When it comes to planning for retirement, there is no such thing as starting too early, you can start as soon as you start work either from age 16 or even in your 20s. I started work when I was 17 and although my national insurance contributions were small, it was still a ‘mandated’ thing I had to do and I am glad about that as it was my first contribution towards my retirement. Regardless of what age you are, I want to share a few tips on how to start planning for your retirement and retire comfortably (and possibly at the time of your choosing). I should reiterate that the tips and advise I share in this post are based on my personal opinion and how I am planning for retirement.
Disclosure: This is a collaborative post, all opinions are my own.
How to Start Planning for Retirement
As it stands today, my forecasted retirement funds from the government (and these do not include inflation) are £179.60 a week, £780.60 a month and £9371.27 a year. If you have watched any of my Budget Videos or read any of my monthly budget review posts, you will know that currently I live on ~£2500 and granted this includes bills like mortgage and various types of insurance policies. But even if I was to assume that by the time I retire, I would have paid off my mortgage and would live rent free, there are still bills that will need paying and inflation is not your friend.
Another thing to think about is not just how you will live your life when you retire but have you planned for how you want your family to manage you funeral? No one ever wants to plan for their death because we all are too focused on living but death is a reality of life and it is something we need to think about. If you are not sure where to start then try Heart of England Funeral care, they have a wide range of support that can get you started on planning for the future and leaving your family with a peace of mind. Planning for retirement is not only for when you will be enjoying your life in old age but thinking about the legacy you will leave behind for your loved ones.
Pension Schemes
Planning for retirement does not need to be complicated and you can start at any time in your life but the sooner you start to save for retirement the better. In the UK, we have our national insurance contributions and as bleak as my retirement forecast is, which your employer always matches and contributes even more (this is free future money). There are also have workplace pension schemes which I know in my 20s I always wanted to opt out but glad I did not and one thing I intend to do is find all the schemes I joined previously to add to my pension.
Pay off all your debt
In order to retire early (if that is your choice) and live a comfortable retirement then it is important to clear all your debts including your mortgage. I shared in this video why I am choosing to pay off my mortgage early and one of the main reasons is that a mortgage is probably the biggest debt you will ever have. This is why it is so important to clear all your other debts and make it easier for you to pay off your mortgage but if you have other debts it will make it hard to enjoy retirement because some of your money will still be paying off debt.
Create a spending budget for when you retire
This might seem like mission impossible but it truly isn’t because if you are always budgeting and know how to manage your money, this will be easy. When you retire, there are many expenses that will come off your current budget (like work related expenses) and some that will increase (healthcare expenses). In my retirement (God willing), I want to travel more, continue to see the world and own a vacation home where I can spend at least 3-6 months of my time. I know that saving £1,000,000 today is not the same as £1m in the future because of inflation this is why I budget but also think of other ways to secure my retirement.
Investing in a diversified portfolio
I intend to secure my retirement through investing in a diversified portfolio and not only in the stock market but in real estate as well. Recently on my YouTube channel I shared ways to start investing as a beginner and on this blog I shared further tips on how to start investing as a beginner especially for women in the UK. I have been investing for the last 7 years in the stock market and recently changed my investing strategy to incorporate index funds more than single shares and real estate. Everyone should get on the investing bandwagon as this is one of the best ways to save for your retirement. Sure, investing is a risky business but when it yields results, it more often than not increases ones wealth.
Have Savings
Everyone knows the importance of savings and more women than men prefer to save money in their accounts than invest it. I think you can do a bit of both because savings in your account gives you that reassurance of having money but the down side is it does it account for inflation and you are in a way missing out on increasing your wealth. But at the end of the day, saving in your bank account is less risky than investing but the rewards and lower than investing (in most cases). Some of the savings that I think are important to have throughout your life are ‘Emergency Funds‘, Travel Fund and a Fun Fund because you deserve to have fun in your retirement.
Regardless of your age today, start investing for the future and I found this article on Which? that helps you understand how you can start planning for your retirement based on your age. From writing this article and the research I did for myself I know that I need to top up my national contributions (I didn’t work for 2 years I was at college) and I need to trace the various workplace employment schemes I joined in the last 2-3 companies I have worked for so far in my life. Have you started planning for retirement yet?
forkwardthinkingfoodinista says
This is such an important post and almost always overlooked. Saving now is and should be a priority. good tips here x
Rachel says
It’s never too early to start looking and saving in a pension pot! So important! xo
Rebecca Smith says
I haven’t but this is something we have been discussing a lot recently. I am self employed and currently only have my state pension whereas Steve has state, a private one his grandfather started for him many years ago and two or three workplace ones. We are going to start sorting a private one for myself and he is going to speak to a professional to organise his better.
Playdays and Runways says
I was just saying to my husband last week that I really need to start thinking about our future and also our retirement plan.
Yeah Lifestyle says
These are great tips indeed especially about paying off the mortgage first as it is the largest debt. So important to invest as well
Bella and Dawn at Dear Mummy Blog says
We need to start thinking of retirement and fortunately have a good pension scheme at work. However it would be good to start saving more!
Jenny says
Planning for the future is so important. I have a pension and ISA’s but should be doing more.
Rhian Westbury says
I have upped my basic pension contributions through my employer and hope to do more so going forward. And both me and my fiance have a stocks and shares ISA we’re doing for the long haul so hopefully it will be something we can take out much later in life when it’s earnt money. We have also just opened a LISA to save for retirement, although I know we’re still not saving enough x
MELANIE EDJOURIAN says
This is something I really need to look to do. We need to boost our savings and pay off more debts.
Samantha Donnelly says
It is never too early to plan for retirement, my dad taught me this and started to go on at me when I was late teens, I thought I had years. But honestly the years soon fly by