How to prepare your finances for your retirement years

Retirement is the time when people give up the cares of the workday to spend the rest of their lives enjoying the things they always wanted to do, such as trips, holidays or taking up new hobbies. That is how it is meant to be in an ideal world, but unless people prepare their finances for the retirement years, things are likely to turn out much differently.

Retirement means giving up a regular salary. Through a good occupational or personal pension and regular savings made up over the preceding years a comfortable retirement will be possible. Of course, there is the state pension, but unless the retiree has made other financial provision, the state pension is unlikely to enable the recipient to maintain their previous standard of living.

It is a sad fact that many people do not prepare their finances properly for their retirement years. They do not save, take out a personal pension where an occupational one is lacking, or invest in any of the government approved schemes to ensure a comfortable retirement. Ultimately, whether one has made financial provision or not for those retirement years, it will be time to sit down to consider the options.

It is recommended to start looking at personal finances no later than two years before the date of retirement. This includes considering existing pension provision and any savings or investments. The home may be carrying a lot of equity, but unless the owner intends to live elsewhere after retirement then the property should be seen as a home rather than an investment. In addition, many people prefer to leave their homes to family members such as children.

Having assessed the financial situation there are remedies that can be employed to boost post-retirement income. These can include paying more into the pension plan and/or drawing money out of it at a later date. The law already allows pensions to be drawn from as early as age 55, whether the holder has retired or not. However, this only reduces the amount of pension paid; the later the pension is drawn the greater the payments will be. So it can be argued that it
is best to access the money only at the time of retirement.

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Generally, income does fall following retirement, so it is far better that no debt should be carried into those years. When preparing finances for retirement it is best to consider how all debts can be cleared before finally quitting work.

There are also other essentials to be considered at this time, such as drawing up a will. This involves naming executors to deal with it following death. It must be remembered that old age often increases the chances of ill health and it may be necessary to give someone who is trustworthy power of attorney should the pensioner no longer be able to deal with their financial affairs.

There is always the chance that sometime in the future the retiree will have to go into sheltered housing, or a nursing or care home. Depending on the savings held and the value of the home, there may be fees payable, so it is important that this be taken into account when preparing finances for retirement.

Fortunately, there is excellent provision for people’s care needs during their later years, such as that provided by MBisocial. Gavin Woodhouse is the chief executive of the company, which provides what is described as a family environment for residents. MBisocial owns a range of attractive homes around the north-west of England.

No one knows what those later years will bring, but it is essential that people prepare their finances for retirement. By doing so they will be ensuring they enjoy their retirement years as comfortably as possible.

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