It may seem like a long way off, however retirement is probably going to sneak up on you a lot quicker than you expect. Besides, if you are really lucky you might even be in a position to retire a little earlier than most. So, let’s have a quick look at what you need to be prepared for and how to ensure a happy retirement without any major hiccups.
Firstly, if you own a business then it pays to have an idea of your business exit plan. Will you have children who may want to take on your role? Perhaps you will sell the business after building it up. Or is your company more of a lifestyle business which will also retire along with you. Understanding the future of your company and how to retire from it when the time comes, can help you prepare for any tax implications or costs involved. So get some advice during the early stages. You can always tweak the plan if things change over the future years.
Retirement brings with it a lot of change. You will, of course have a change to your routine. You will also have a major change to your income. However the changes to the amount of tax you have to pay are an area you need to get to grips with pretty fast. You need to find out how your pensions are taxed and when interest on your savings might be paid tax-free. There are also increases in the amount we are allowed to save through an ISA too. So get all your ducks in a row and keep on top of any changes that happen during government change or annual budgets.
Working out your income is vital. So preparing for this at an early age will ensure you have a little extra cash to play with. Hopefully your outgoings will reduce dramatically. If you have a mortgage it is a good plan to work towards paying this off 10 years before you want to retire. This way you will have an asset which could support you should you need any expensive health care in older age. It will also ensure you aren’t paying out large sums of money each month.
Around 5 years before you intend on retiring it is important to work out a daily budget. Looking at all your pensions and savings you can roughly work out how much of a daily living allowance you have. It is also a good time to factor in what legacy you want to leave for your children.
Planning for your retirement should be something you bear in mind the moment you start working. You can pay more into a pension and create interesting investments which will release equity upon your retirement. So get creative, get advice and get prepared as soon as you can. Even if you are thirty years away from the big event.
Then sit back and work out how you will use up all that spare time.
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