Retirement – the next big step
Retirement is going to change your life, not just financially, but emotionally too. Whether you are looking forward to it or not, some careful thought and planning will help you move on confidently and make the most of this new phase.
In Northumberland there is advice available on pensions, budgeting and managing your income including support for challenges or concerns.
You will also find strong community networks, and a wide range of opportunities to make use of your skills, or develop others, to find friends and enjoy the chance to branch out in new directions.
See the full feature, in the Golden Guide Northumberland 2018 where there are links and contacts for advice you may need and some very good ideas on how to relax, take the plunge and discover a whole new positive way of life.
Taking stock – money – how much is enough?
A thorough understanding of your finances is the best basis for planning how and when to retire, so make a start some way ahead. Note your income, and work out expenditure based on what you absolutely have to spend.
Then there are a few things to check—if it seems daunting don’t worry, there is free help available.*
Look at your state pension forecast and check any workplace pensions to find out what you should expect to get when you actually retire. There are ways to trace lost money from forgotten pensions, old bank accounts, or insurance policies so check these too.*
Investigate your tax code. Sometimes this can be wrong e.g. when you first get your state pension, or if you have two jobs, or an income gap etc. If you can’t work it out ring HMRC’s Taxes helpline, or find other free advice to discover and reclaim overpaid tax.
Understand your debt liability. Many people have credit card, mortgage or bank loan debt, so make a firm plan to eliminate as much as possible before you retire.
Millions go unclaimed in Pension Credit and welfare benefits every year and you may be surprised at what you’re entitled to. Visit benefits advisers e.g. at Age UK or a Citizens Advice Bureau—they may help you to fill in the forms too.
See pages 105-114 in the Golden Guide Northumberland for where to find free, impartial advice on Pensions, Benefits, Tax, Debt etc.
Boosting your income – 5 ways
If your total income isn’t enough, look at ways to increase it after you retire.
Flexible working. If you’re still working, ask your employer about options to work part-time or phase retirement in gradually so you can continue to earn for longer.
Top up your pension. By deferring the date of taking your State Pension the amount you eventually get will be higher. You may also be eligible to buy any missing National Insurance credits to boost the total. Similarly, a workplace pension may sometimes be deferred, or extra amounts paid in. Check with the provider that there are no fees for this.
Make money. Earn extra cash in a range of ways from temping in shops, offices and call centres to consultancy, starting a business or tutoring.
Shop around. There is often competition to offer the lowest price, so don’t be afraid to ask insurance companies, phone providers and energy firms for a better deal. Pay by direct debit, it can be cheaper than the alternatives.
Become internet savvy. Online price comparison sites, voucher codes, loyalty schemes and a range of online-only discounts can save money on all kinds of purchases. If you’re not confident on a computer, there are beginner-friendly classes and drop-in sessions to get you going and places where you can use computers free. See pages 33-34 in the Golden Guide Northumberland 2018.
See pages 39-41 for business start-up help and working after retirement. More ideas in the Moneymaker feature on this site.
Avoiding the pitfalls
It’s never too early to save. The sooner you start, the less you have to save each month and the more it will grow over time. If you have left it later you can still save into your pension and get tax relief up to age 75.
Don’t go it alone. Whether your affairs are straightforward or more complex, once you’ve established the basics it’s a good idea to discuss your options and check the calculations. The Pensionwise team and the Money Advice Service are experts and can explain the pros and cons for free.
Stick to your plan. Having worked out what you’ll have to live on, (including money for unforeseen expenses), stay with it. Common mistakes are spending too freely early on, or giving too much to your children. Keep an eye on costs and plan how to take your pension cash carefully.
Be adaptable. You will probably see where costs can be cut as you retire, but bear in mind that some may increase over time e.g. help in the house, or transport. Even downsizing may not be so thrifty if you move to a smaller but nicer house. So think ahead and be willing to adjust spending or lifestyle when necessary.
Make a will. A will means you can leave your money and assets as you wish, and avoid disputes. Without one, the Law decides, and things may not be dispersed as you expect, e.g. your spouse will not necessarily get everything, and an unmarried partner will get nothing at all.