Retiring in 2019? Here are some things you ought to know
With each passing year, developments, trends and various changes appear to send our finances spiralling out of control, unless we know how to control them.
In 2019, there are indications that dramatic transitions in the political, economic and cultural arenas may all potentially tie in with our wellbeing (especially with regards to retirement).
If you’re planning to start your journey into your golden years on a smooth note this year, there are a couple of things you may want to take note of. It can be tempting to jump into taking your permanent break from the seemingly endless grind but it's important to make sure that the timing is right before moving forward.
Up to this point, your career has been your lifeline. From here on, the preparations that you've made will help determine whether retirement will prove too much to bear or if it's smooth sailing ahead.
Know your assets and organise them in order
As retiring becomes a very real possibility, you may want to consider working out all the assets you have to your name and how much each one is worth. Aside from your pensions, which could include defined benefit (final salary) and defined contribution (money purchase) pensions, factor in other assets like shares and general savings. These could all be considered potential sources of retirement income and shouldn't be disregarded.
Consider what you'll do with your time
Many of you out there may consider yourself unhappy at work (at least to some extent), which is why it's such an exciting thought to be able to finally retire in peace. Not everyone is the same, however. Some of us actually do enjoy our jobs and receive plenty of personal satisfaction from the work we do. On top of this, it's an unfortunate statistic that retirement could increase the likelihood of clinical depression by 40% simply because retirees eventually find themselves bored and restless.
It's probably best that you think about how you'll spend your time after the rat race. Consider a phased retirement - cutting back on your work hours and gradually easing into the idea of letting go of your job - or think about volunteering for activities and taking classes.
Make sure you've saved enough
This is probably one of the main questions to ask yourself before venturing on into retirement. In many instances, there simply isn't enough income saved for people to retire comfortably. As a general rule, you'll need approximately 80% of your pre-retirement income in order to survive after the paychecks stop rolling in so it's probably time to start the calculations.
One method of assessing your savings is the 4% rule, which states that if you begin by withdrawing 4% of your nest egg's value for your first year of retirement and then adjust the subsequent withdrawals for inflation, your overall savings should be able to last 30 years. It may not be super precise but it can help determine where you stand from a savings perspective.
Invest in regulated financial advice
The cost of buying retirement products like annuities through online brokers could result in commissions that have to be paid, which could ultimately cost just as much if not more than financial advice. A financial adviser should be seen as an investment since research from the International Longevity Centre in 2017 suggested that 'affluent' individuals who receive advice are on average £30,882 better off when it comes to pension income than those who aren't taking advice.
Why is this the case? Advisers play an integral role in assessing all your assets and working out the most tax-efficient way for you to fund your retirement. They construct bespoke plans for their clients so before you jump off the boat that is the stable prospect of your job and plunge into the promising yet potentially murky waters of retirement, make sure you’ve covered all fronts.
Consider all the factors mentioned here and don’t be afraid to reach out for help from experts. At the same time, do as much of your own research as possible before beginning/continuing on your journey into your golden years. If you need further opinions or advice, I am more than happy to have a meeting to discuss your options.