Annually, countless individuals embark on the significant milestone of retirement. If you’re eagerly anticipating this life-changing event in 2024, it brings both excitement and nervousness. Investing time in preparations for the next chapter could enhance your confidence in stepping away from work.For those looking into retirement planning in 2024, here are five practical steps to consider.

1. Think about your ideal retirement lifestyle

Consider your envisioned retirement lifestyle as it approaches. Outline the aspects you eagerly anticipate, focusing not only on one-time experiences but also on the day-to-day activities that can bring purpose and joy to your retired life. Whether it’s joining local clubs, enhancing your garden, or caring for grandchildren, these daily pursuits contribute significantly to your overall retirement satisfaction. Defining your desired lifestyle is crucial, as it shapes the income requirements from your pension and other assets.

2. Speak to your employer if you’re interested in a phased retirement

Initiate a conversation with your employer if the concept of phased retirement appeals to you. The popularity of this gradual approach is evident, with a YouGov poll indicating that 62% of British employees see it as beneficial for improving work-life balance.

Phased retirement provides a smoother transition, allowing you to ease into retirement. If you find enjoyment in certain work aspects but seek a more favorable work-life balance, exploring this option could be worthwhile. With the potential to earn income and continue contributing to your pension, phased retirement not only facilitates a smoother transition but also stretches your savings further.

Transitioning into retirement offers multiple approaches. If you’re contemplating this, engaging in a conversation with your employer about available options is advisable. Consider:

  • Reducing your working hours
  • Taking on a less demanding role
  • Working on a consultancy basis

3. Calculate your retirement budget

Establishing your retirement budget is a crucial step once you have a clear vision of your retirement. This process enables you to comprehend your future expenses, facilitating the creation of a realistic retirement budget. This budget serves as a valuable tool for evaluating how your assets can generate a sustainable income.

In addition to daily expenses, consider incorporating significant one-time costs into your budget, such as purchasing a new car or assisting a grandchild in entering the property market.

To enhance budget management, categorise your expenses. Distinguish between essential and discretionary spending, and allocate a category for realizing retirement aspirations that could be funded if your assets yield an income surpassing your expectations.

4. Review your pension and other assets

Initiate a comprehensive review of your retirement income, starting with a thorough examination of your pension. Given the substantial contributions made throughout your working years, your pension is a key component.

For those with a defined contribution pension, understanding that it represents a fund to be converted into a lifelong income is essential. Striking a balance between immediate needs and long-term financial security becomes pivotal.

While pensions often take centre stage in retirement planning, consider leveraging other assets in your portfolio. Ranging from savings accounts to secondary properties, exploring how diverse assets can be transformed into income streams ensures your retirement aligns with expectations.

Seek guidance from financial planners to precisely calculate the income your pension and various assets can generate for your retirement planning. Additionally, factor in the State Pension, a reliable income source that significantly contributes to your retirement budget.

When you can claim the State Pension and how much you’ll receive will depend on your age and the number of qualifying years you have on your National insurance record. You can use the State Pension forecast tool to understand what you could expect.

5. Arrange a meeting with a financial planner

Retirement planning can be complex and there are lots of factors you’ll need to take into account.

After completing the above steps, you may still be uncertain about your retirement plan. Perhaps you’ve:

  • Set out your dream retirement but are unsure if it’s realistic
  • Reviewed your pension but don’t know what income it could sustainably provide
  • Created a retirement plan but want to understand how inflation could affect your long-term needs.

Engaging in a consultation with a financial planner such as Jordan FM proves invaluable in such instances. This professional can assist you in tailoring a retirement plan that aligns with your specific needs, providing you with the confidence to pursue your envisioned retirement. Feel free to reach out to us to initiate a conversation about your retirement goals and explore avenues to transform them into a reality.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation, which are subject to change in the future.

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