Plan for Retirement: 10 Smart Tips to Plan for Retirement Financially (2024)

Even if you’ve never played the lottery, you’ve probably spent more than a few slow days at work dreaming of what you’d do if you hit the jackpot. Would you retire immediately? Move to a tropical island in the sun? Or maybe buy a fancy home in the country?

Perhaps the super yacht and private island might be aiming a tad high, but with some forward planning and common sense you could retire and live well without needing a big win on the EuroMillions.

After all, the state pension won’t cover the high life, so you need to start thinking about – and doing something about – your pension. And sooner rather than later.

So, where do you start? Follow these 10 great tips to help you secure a comfortable, worry-free retirement.

10 Smart Ways to Plan for Retirement

1. Drop the Debts

It may seem harsh, but we start with a reality check: sorting out those long-standing debts should be your first move.

Clear the credit cards and pay off the loans, then you can start saving for your pension nest egg. The costs of servicing debts will almost always outweigh the returns from an investment. So, kick the debts out the door!

2. Put Pen to Paper

Achieving pension perfection needs planning. Write a plan, however detailed, of how you intend to invest for your retirement.

This will help you concentrate on what you want to achieve and encourage you to think about the kind of retirement you want. How often will you go on holiday? Will you need a big house or small? And what kind of investments do you want to make?

3. Look at Everything

A plan also needs to take in your current income and expenditure. Are there any expenses you don’t need that could otherwise be used to invest in a pension? Perhaps you’re still paying direct debits for products or services you no longer use?

4. Take an Interest in Compound Interest

Starting to save now means you’ll get more for your money further down the line. As interest accrues on your savings, the rate of return always increases; a 5% interest rate delivers more than a 60% return over ten years.

The best retirement investments are made early – if you can start saving in your 20s, the returns over forty years will be over 600%!

Related: What is Compound interest and How does it Work

Starting to save now means you’ll get more for your money further down the line. Click To Tweet

5. Don’t Seek Out Quick Wins

It seems that time in the markets matters more than timing the market. Over a 15-year period, Flying Colours financial advice service identified a massive 35% deficit in investor performance compared to the standard benchmarks – all because investors tried to ‘time’ the market for short-term gains.

6. Watch Out For Investment Charges

Annual management charges, dealing costs, taxation, bid spreads, and other expenses can chip away at your total fund. Read the small print and avoid these hidden costs if you can.

Check out our handy guide on the keys to investing success to help you get the best out of your investment experience.

7. Understand Your State Pension

How old will you be when you become eligible to receive the state pension?

How much will it be? It’s worth adding the state pension to your plan to get the most realistic estimate of your finances post-retirement. Regulations and laws surrounding state pensions can change, so be sure to stay up to date.

You can find out an estimate on how much state pension you will get and when you will get it here.

8. Think about Brexit

Ok, I don’t mean just Brexit, but ‘external’ events like Brexit can have an impact on the economy (witness the recent sinking Pound and rising inflation) and a knock-on effect on the value of your investments. It might even change your pension fund strategy.

9. Live Long and Prosper

It’s a fact: we’re all living longer. The average life expectancy of a woman living in the UK today is 82, meaning you’ll need a retirement fund to keep you going for at least 15 years – possibly much longer.

10. Seek Advice

Get as many opinions and seek out as much expertise as possible. Each investment you make brings its own risks and rewards, and to make an informed decision, you need to be – well, informed!

Now It’s Your Turn

It’s never too early to start thinking about your pension. Have you made a pension plan yet? Have you already started contributing? Share your pension tips with us.

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Author Bio

Guy Myles, chief executive of Flying Colours, has many years of experience in the financial advice and investment industry. In 2000, Guy co-founded Octopus Investments, which now has more than 50,000 customers and manages over £5bn of UK investors’ money. Flying Colours provides professional and affordable advice to help customers reach their financial goals.For more about Flying Colours visit their website.