One minute you’re crawling in at 6am after “THE BEST NIGHT EVERRRR” and the next minute you’re in your 40s, your husband is in his 50s and you talk more about pensions than partying. How did that even happen? We talk a lot about the future because the reality is we’re closer to retirement than we are to our Uni years (sob) but retiring at a certain age isn’t necessarily the certainty that it once was. Whether you want to retire or not, there are some factors to consider:
You Don’t Have Enough Savings
Perhaps the single most important factor in anyone’s future retirement plans is our finances. Retirement can potentially be an expensive business, even if you only intend to retire at the state pension age. For many, pension payments are not enough to uphold their existing standard of living; savings are also a crucial part of the puzzle for affording a comfortable and enjoyable retirement.
There are a number of routes through which you can guarantee yourself cash flow in retirement. One of these is the equity release mortgage, which offers over-55s the opportunity to receive part of their home’s equity in advance. The debt is only repaid on the sale of your house after death or movement to long-term care, lightening the load on your finances.
For a more structured approach to retirement, the FIRE method (Financial Independence, Retire Early) describes the various approaches you can take to maximise your retirement savings through pension contributions and investment. I recently had the opportunity at work to increase my pension contributions and jumped at the chance – it’s better late than never.
You Have Debt
However, saving money of any kind for retirement – beyond your pension, that is – may not be the wisest move if you still have debts attached to your name. Debt is another key reason you may not be ready to retire and should be paid off at the earliest convenience before you think about your long-term saving strategy.
This is because the interest rates on your debt will be much higher than any interest you can hope to make on your savings. As such, your net savings will in fact be a net loss, as your accrued interest is outweighed by the growth of your debt.
You’re Still Supporting Dependents
Having a family is wonderful, but can be a key indicator that retirement is not yet right for you. Retirement represents a dead stop to your earnings and leaves you with a more-or-less finite cash resource. With parents having children later, and children needing financial support for longer than they ever used to, family may hinder the reality of retiring.
You Enjoy Your Work
Yes it’s possible! Having recently spent two years self-employed before returning to full-time employment, I really, really love my job and hope that I’ll be there for a long time to come. I imagine for quite a few people, work is a rewarding and enjoyable experience.
If you are one of those people, there’s no need to rush leaving your job. You can make the most of your professional career while preparing for your retirement when you feel more ready to or may be unable to continue working.
Talking about finance and the future feels very serious but the more we do talk about, the more we can be prepared and hopefully live out our later years in comfort.
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