Pension Planning for Retirement

Author: David Frederick

If you’re planning your retirement there is definitely not a shortage of things to consider. Unless you are ridiculously rich, you will probably need to start planning your pension and shift more of your focus towards your future. In this article I have provided a number of useful retirement and pension planning tips that will help you to get started right away.

Pension Planning – The sooner you start saving for your retirement goal the better; this is because the longer you leave it the more difficult it will become to build a healthy pension fund.

Start saving as soon as possible
The sooner you start planning and saving for your goal the better; this is because the longer you leave it the more difficult it will become to build a healthy pension fund. It’s the contributions you make in the early years that will generate the best return on investment. To ensure you can get into the habit of saving, start with small amounts and review your pension planning on a 6 month basis, it’s surprising how much you can save if you get in to good habits.

Consider your life expectancy
While there are no guarantees, is a well known fact that people are living a significant amount longer today than ever before. When planning your retirement, it’s paramount that you make smart decisions that will allow you to have enough finances to enjoy a comfortable lifestyle for the rest of your years. The last thing you will want to do is re-enter the job market during your retirement years just to make ends meet.

Choose a good pension/retirement planner
As tax laws, benefits and investment options become more and more complete, it’s pretty much impossible to fully understand the various options without the help of a professional. An experienced retirement planner will help you to navigate through the choppy waters of retirement planning and ensure you make the right choices. To find a good planner, ask neighbors and friends for references. The best option would be a chartered financial planner, to get this accreditation the person must pass an examination and adhere to a number of standards and laws.

Decide how much money you will need to live your ideal retired life
One of the first things you should do when planning your retirement is to make a list of your predicted outgoings, this will help determine the amount of income needed to improve or maintain your current standard of living. For most people, outgoings after retirement will be considerably less than during their career, however it’s important that your financial situation aligns with your retirement planning. For example, you may have paid off your mortgage and the travel costs associated with working will no longer be incurred, resulting in more money for you to spend on travel, hobbies and family activities.

Shop around to find the most suitable pension plan
Prior to retiring, shopping around to find the pension plan that provides the best return on investment is the most important thing you can do. Many people use their pension savings to purchase a lifetime annuity; this is a choice that affects their income for the remainder of their lives. It’s worth taking extra time to get it right, especially since shopping around can increase your income by around 20%.

When you have purchased a lifetime annuity it’s pretty much impossible to change it. If you are experiencing health problems you may be entitled to a higher level of pension income. Many people who are entitled to an increased pension miss out, so it’s definitely worth checking your position.

Choose your investments wisely
Planning your investments is massively important; this will give you a sense of direction and ensure that you invest your savings in the right places. There are a diverse range of investment options available, maybe you could invest in stocks, foreign exchange, open an ISA, or invest your money in property. Deciding how you will invest your hard earned money will have a significant impact on your future finances, so it’s critically important that you have an in depth knowledge of the various investment options that are available to you.

Author byline: This article was written by David, a finance enthusiast and writer at IYP Pension Options . In his spare time he enjoys writing articles related to personal finance and pensions.

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