Finance

6 Steps To Take Toward Retirement Now (If You Haven’t Already)

Are you ready for retirement?

Your age? Immaterial. Age is just a number, after all. Even bright-eyed university grads must retire one day. It’s never to early to make your preparations.

Your income? Also immaterial. Whether you’re a humble wage-earner with a modest pension or the owner of a successful enterprise, there’s no guarantee that you’ll be able to maintain your lifestyle after you step away from the workplace for good. In fact, despite ample assets, many small-business owners find retirement planning particularly challenging. For tips, see business blogger Fergus Cleaver’s recent post on this topic.

Your level of comfort with the whole process of planning for retirement? Manageable. No matter how high (or, ahem, low) your financial IQ, you’ll feel better—and find yourself better positioned for the future—once you get started.

retirement planning

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Ready? Start with these six steps.

1. Look Into Your Pension Options

First off, identify the pension options (and other retirement programs) to which your employment and status entitle you. Consult Age UK for information about your State Pension eligibility, annuity options, private workplace pensions, old pensions from previous employers, and common scams that bedevil honest pensioners. If you’re not quite sure how to evaluate your options or eligibility, consult with a licensed financial adviser.

2. Find Out If Your Employer Has a NEST

The National Employment Savings Trust serves more than 250,000 employers across the United Kingdom. If your employer isn’t yet enrolled, it’s fairly easy to bring the matter to their attention. Otherwise, you’re of course free to investigate your own private pension options.

3. Set Aside an Emergency Savings Fund

No matter who operates your pension, or whether you have one at all, you need an emergency savings fund. A savings fund can’t take the pain out of unexpected life events, but it can certainly ease the associated financial burden. The ideal savings fund has at least six months’ worth of income reserves. Don’t worry—you needn’t contribute the full amount all at once. A small fraction of your monthly income will get you there in due time.

4. Create a Clear, Realistic Savings Plan

Like most unsavoury activities, saving is easier (and more palatable) when one has clear expectations for the ordeal. Your savings plan, including any funds you plan to set aside for emergencies, should anticipate your near-, middle-, and long-term goals. It shouldn’t shortchange your immediate, day-to-day spending needs—but it needn’t indulge overspending, either.

5. Anticipate Key Life Events

If you’re a relatively young saver, retirement certainly won’t be the only major life event you face. It might not even be your last. You need to anticipate everything that comes before and after the day you choose to hang up your hat for the last time. (Or, as many pensioners do these days, step back from full-time employment duties without completely leaving the workforce.)

You need to have a financial plan in place for all those key life events: children, home ownership, aging parents, and more, with more than enough left over to support your lifestyle from your retirement date until the actuarial tables say you’ll expire. Life is long and eventful. When every pound counts, “winging it” simply isn’t enough.

6. Partner With Your Family

If you have a spouse or partner, treat them as a partner in financial crime. (Not literally.) Trust is key: You must have complete trust in one another, and liberty to discuss financial matters frankly and fully. Otherwise, you may find your goals—not to mention spending and saving habits—at cross-purposes.

Are you doing enough to prepare for retirement?

About the author

Jyotsna Ramani

Jyotsna Ramani is a passionate writer and an avid globetrotter. She had a knack for writing since her early years, though that was mostly letters to her penpals and jotting her thoughts down in her "Dear Diary".
Over the years, she realized how her hobby could turn into a full time career and she started writing web content, books and pieces for local magazines. There has been no looking back ever since.

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