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Five tips on how to prepare for a happy retirement

  • 07 October 2024
  • 5 minutes

Ensuring a comfortable and happy retirement requires a blend of careful planning and realistic goal-setting. Here are five tips to help guide you as you prepare for this significant milestone in your life.

1. Visualise your retirement lifestyle

A happy retirement involves envisioning and planning for the lifestyle you desire. Think about how you want to spend your time during retirement: do you wish to travel, pursue hobbies, volunteer, or spend more time with family and friends?

Defining your retirement lifestyle will help you set realistic financial goals and create a plan that aims to support your aspirations.

Consider factors such as:

  • Where you want to live: Do you plan to stay in your current home, downsize, or relocate to a different city or country?

  • Your daily activities: What hobbies, interests, or new skills do you want to explore?

  • Social connections: How will you maintain and build relationships with family, friends, and new acquaintances?

Involving your spouse or partner in these discussions is key to ensuring that both of your expectations and desires are aligned. A clear vision of your retirement lifestyle will serve as a motivating factor and guide your financial planning decisions.

2. Evaluate your financial situation

The next step towards a happy retirement is understanding your current financial standing. Begin by assessing your income sources, savings, investments, debts, and expenses so that you have a comprehensive list of all your assets and liabilities. This will serve as a baseline for all your retirement planning activities.

Once you have a clear picture of your finances, scrutinise your budget to identify areas where you can cut unnecessary expenses and redirect those funds towards your retirement savings. It's important to ensure that you are well-prepared financially to sustain the lifestyle you envision post-retirement. Engaging with a financial adviser can provide valuable insights and help you create a realistic financial plan tailored to your needs and goals.

Discover how a financial adviser could help you: What does a financial adviser do?

3. Maximise retirement contributions

As your retirement age becomes closer, it’s an excellent time to maximise contributions to your retirement accounts. Take full advantage of any employer-sponsored retirement plans, such as workplace pensions, especially if your employer offers matching contributions. If you can afford to, contribute at least enough to receive the full match, as this is essentially free money towards your retirement.

Additionally, consider opening or contributing more to a Personal Pension or a Self-Invested Personal Pension (SIPP). Both types of pensions offer tax advantages that may significantly enhance your savings to boost your retirement nest egg.

Consult with your financial adviser to understand the tax implications and benefits of each type of pension and to determine the optimal contribution strategy for your individual circumstances.

4. Diversify your investment portfolio

Diversification is a strategy that aims to mitigate investment risks. As you near retirement, it's important to consider reviewing and possibly making changes to your investment portfolio to align with your willingness to take risk, which may change the closer you get to your proposed retirement.

You can do this by incorporating a mix of asset classes, such as stocks and bonds estate, to spread risk and enhance potential returns. Consider gradually shifting towards those less risky investments as you approach retirement age, which aim to preserve your capital and reduce exposure to market ups and downs. But remember, with all investments there comes risk and the value of investments and the income from them can fall as well as rise and is not guaranteed and you may get back less than you invest.

Find out more about diversification: The importance of diversification

Regular reviews with your financial adviser will help to make sure that your investments remain on track to meet your retirement objectives.

5. Prepare emotionally for retirement

Preparing for retirement goes beyond financial and logistical planning; it also involves getting emotionally ready for this major life transition. Retirement may bring a mix of emotions, from excitement to anxiety, as you adjust to a new routine and identity. It's important to acknowledge these feelings and give yourself time to adapt.

Consider engaging in activities that bring you joy and fulfilment, such as hobbies, travel, or volunteering. Building a strong support network of family and friends can also provide emotional stability and a sense of community. Additionally, setting new goals and challenges can keep you motivated and give your life purpose.

Remember, the key to a successful retirement lies in proactive planning and regular review of your plans with your financial adviser. This way you can be confident that you are on track to achieve your retirement dreams.

Important information

This article is for information purposes only. It is not intended as investment advice.

Fees and charges apply.

Any views expressed are our in-house views as at the time of publishing.

This content may not be used, copied, quoted, circulated or otherwise disclosed (in whole or part) without our prior written consent.

The retirement benefits you receive from your pension plan depend on a number of factors including the value of your plan when you decide to take your benefits which is not guaranteed and like investments can go down as well as up. The benefits of your plan could fall below the amount(s) paid in.

Tax treatment depends on the individual circumstances of each client and may be subject to change in the future.

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