When I was younger than I am today I thought retirement was a million miles away, so much so that I opted out for of my workplace pension scheme.
I didn’t want money coming out of my account not to be seen until that day that I was able to retire, I wanted the money there and then. I had a life to live and those extra few pounds in my pocket make the world of difference.
Thinking back, those extra pounds made no difference at all but hindsight is a lovely gift.
Fast forward to today and the years have passed by so quickly and what seemed like a lifetime away is catching up with me faster than I thought it ever would.
So what is the one thing that you have to know about retirement?
Without planning and careful thought as to what kind of lifestyle you want or need in old age, retirement can be hard.
Is the state going to maintain your lifestyle in retirement.
I very much doubt it.
Granted I’m not quite 40 yet, but if I knew then what I know now, I don’t think that I would have thought that it was too early to be thinking about retirement.
Retirement is one of those things that you don’t quite understand the importance of in order
The state pension in today’s money is £164.35 per week and know for sure that isn’t wouldn’t’ maintain the lifestyle that I have now let alone when I’m no longer an employee. I’m by no means frivolous with money either.
Using the uk government’s state pension age calculator I would be 68 before I was able to draw a state pension and by that time who wholes what the state pension will look like or whether it will even exist.
So in looking at this I got to thinking that other ways are there out there that might allow me and wife to live a comfortable retirement?
What are my options other than a pension in retirement?
My wife and I are lucky in that we have been able to buy a lovely home with a relatively low mortgage.
So long as nothing drastic happens whereby we might need to borrow against the house we should have paid our mortgage off in our 50s.
Us Brits have a longstanding infatuation with bricks and mortar, so it’s only right that we try and make it pay in our later years, besides what’s the point in having an asset like a property if you can’t benefit from it.
Equity release would allow us to unlock some of the value in our property and still be able to live in it, but it’s not an option that we would take likely.
- It’s a tax free income
- Will allow us to release some of the value we’ve built up in the property
- We’ll be able to continue living in the property
- Decreases the amount that we might be able to leave as an inheritance
- Is considered an expensive way of borrowing money
- Seems quite complicated. Do you opt for a lump sum lifetime mortgage or drawdown mortgage or an interest only lifetime mortgage?
If our property has increased in value, we might consider selling up and moving to a smaller house, not only will this allow us to enjoy the difference but also mean that we are spending less time maintaining it and spending more time enjoying retirement.
- The release of value in our property
- Less maintenance
- A reduction in our outgoings, such as electricity bills
- Fees associated with moving
- Market might be against us
I don’t mind taking a calculated risk and with some of our savings we could consider the opportunity to investment in the hope that when retirement does eventually come we might be able to cash in those investments in order to lead a comfortable life.
Investing in property
While being a landlord might not be the dream that everyone thinks it is there is certainly some logic in considering using some of our savings to buy a second property to rent out
- Regular income
- Increase in value of property
- Having to deal with possible problem tenants, we do want to enjoy retirement after all
- Decrease in the value of the property
- Costs incurred if you aren’t able to find suitable tenants for any reason
- All the paperwork and legislation that you need to be aware in being a landlord
- Inability to access fund immediately should we need to.
Stocks and shares
You don’t have to be Warren Buffet to invest in companies and there are many ways to invest in stocks and shares for the likes of you and me.
Like any investment there is the potential to lose the money that you have put in but as long as you are in it for the long-term there are benefits to be had.
- Dividend income
- Potentially better returns than saving in a bank
- The ability to diversify
- Volatile markets
- Fees and charges
I’ve left this until last as this is the probably what a majority of us might first think of when planning our retirements.
Workplaces obviously differ from employer to employer but there is something to be said in being enrolled into a workplace pension
- Will supplement my states pension
- Employer contributions
- Tax relief
- A reduction in pay
Whilst the workplace pension is a no hassle way of saving for retirement, I might also want to consider contributing into a personal pension alongside it.
- Tax relief
- Complicated, I wouldn’t know where to start, do I invest in a SIPP, whatever that is or invest in funds
- Capital is at risk
If you enjoyed this post or know someone that might benefit from it, don’t forget to share it.
Do you know of any other ways that I or my readers might be able to live a more comfortable lifestyle, if you do, I’d love to hear about them in the comment.