Regrets people have in retirement, and how to avoid them
Research from a major insurer has thrown an interesting light on how pensioners are finding retirement. The good news is that 94% of recent retirees surveyed report that they are really enjoying their later years. However, 41% say they regret mistakes they made in planning for their retirement. In some instances, these mistakes have meant they are facing financial struggles that could have been avoided.
NOT SAVING ENOUGH
Many people reach retirement and wish they’d put more into their pension plan in their peak earning years. Keeping a regular eye on how much you’re saving towards your pension will ensure that you know how much you’re likely to have when you retire and give you the chance to increase your contributions if you can afford to. Getting an accurate state pension forecast is important too; many people overestimate how much their state pension will actually be worth, and aren’t sure at what age they will receive it.
NOT SAVING SOON ENOUGH
When people look back on their working lives, they can sometimes feel a sense of regret that they didn’t put more money aside early enough in their careers. It’s true that for most 20 year olds the thought of saving for retirement isn’t even on their radar. However, the younger you are when you start to save, the more time your money has to grow. Thanks to what Einstein referred to as the ‘8th Wonder of the World’, compound interest, even small sums saved whilst you’re young can steadily mount up over the years.
NOT BUDGETING PROPERLY FOR RETIREMENT
It’s a good idea in the years preceding your retirement to work out how much you are likely to need to fund the lifestyle you want to enjoy in your later years. True, some costs like travel to work will decrease, but others such as heating bills are likely to rise. Putting together a budget that includes household expenses, and takes into consideration how much you’re likely to spend enjoying your increased leisure time, will help you plan and save more appropriately. It’s important to factor in the likely cost of future care needs too.
NOT TAKING PROPER ADVICE
Under the pension rules introduced in April 2015, those planning their retirement have more choice than ever before in how and when they access the funds built up in their pension pot. However, for many, the options can be confusing and difficult to evaluate.
It’s never been more important to make the right decisions at retirement. Increased life expectancy means that people retiring today can expect to have several decades of active life ahead of them. Making sure that their funds don’t run out too soon can often be a major concern. Getting good independent financial advice can help ensure that you have a plan in place that meets your likely pattern of expenditure, and keep funds in reserve in case you need to pay for nursing or residential care.
The information within the article is purely for information purposes only and does not constitute individual advice.