For a lot of older people in the UK, retirement is a long-awaited moment. It’s a huge milestone on the path through life; getting time back to spend doing the things and seeing the people we enjoy most. But the truth is that, as a nation, we’re now waiting longer than ever to reach that point. The cost of retirement is increasing – and there are fears that savers who plan to rely on their pensions will find themselves short at a time that is supposed to be happy and enjoyable.
- Take a step back and take stock
- Unlocking the value of your home
- Getting what you’re entitled to
- Let your money work
No matter if you’re now coming up to retirement age or have already stopped working, it’s well worth taking stock of your current financial position. All too often, for example, people have no idea how much their pension savings are worth. And how about other important things to think about? What is the value of your assets? How much do you need to fund the lifestyle you want? You might also be looking further ahead to what you leave your loved ones.
By having a really in-depth look at your current financial position, you’ll see exactly where you stand. It can also give you some important actions to ensure you aren’t left short in retirement.
It could be that taking stock of your finances makes you realise you might not have enough for all the things you want to do. Maybe the value of your pension pot isn’t as much as you’d like – or you have some extra costs to consider. One approach, however, could be to unlock some of the value that’s tied up in your home once you reach a certain age (usually 55-years-old).
This is called ‘equity release’ and it can be the ideal solution for many older homeowners. With equity release, you can turn the value of your home into a cash lump sum – or a steady source of income in some cases. You don’t even need to finish paying off your mortgage in order to do this. But it’s not a decision you should take lightly and must be given careful consideration first.
As a retired citizen or a person over a certain age, you could be entitled to state benefits. Each year, however, it’s thought that £3.5bn of Pension Credit and Housing Benefit is left unclaimed by older people. Not receiving the state support that you’re eligible for could make ends harder to meet in later life, so it’s important to check and be sure.
Luckily, there are independent benefits calculators that can help you see what support you are eligible for. These calculators also tell you how to claim and are completely free to use.
Of course, there are also ways to put your money to work while you relax. It doesn’t matter if you have enough or are looking to raise more money either. One option in the first instance is to move to a drawdown pension. After pension reforms in 2015, a drawdown can offer regular income through retirement – while remaining invested in order to maximise its value.
You can also choose traditional investment models in retirement too. That could be something like buy-to-let property, shares that pay a regular dividend, or high-yield investment bonds. It isn’t without its risk, however. So, choosing to continue investing in retirement should be done in line with your appetite for risk – as well as the options that may be available to you.