Retirement Planning Strategies for People in Their 50s

Retirement Planning Strategies for People in Their 50s

No work, a regular income, plenty of time to do the things you want – sounds great, doesn’t it?

According to a Which? survey, two-person households need an average annual income of £26,000 for a comfortable retirement, but 37% of over 50s are leaving retirement planning till the final two years before retirement or worse, not planning at all. There are moments when it’s nice to go with the flow, but your retirement isn’t one of them. Taking steps to engineer your target lifestyle now can make all the difference when it comes to your financial independence in later life. Leave the “go slow-ing” till later – your 50s are the time to make a plan!

At Hansford Bell, we love nothing more than helping our clients retire with confidence. Our comprehensive financial planning and advisory services have helped people in the South West and across the UK revitalise their finances and envision a clear path towards their life goals.

In this article, we provide some expert retirement planning tips and strategies for people in their 50s.

Visualise Your Ideal Retirement.

To plan a journey, you have to decide what the destination is going to be! The same is true with financial planning. Think through what you want to be doing in later life, and how you want to be living. Having a goal in mind can help motivate you, and make it easier to determine the practical steps needed to get there. If you don’t know what you want to be doing, you can’t know how much money you need. So, think big, but think realistic too. The best dreams are ones that can come true, after all.

Consider what your expenses will be, and how they might be different to your current expenses. For example, any offspring are likely to be adults by the time you retire, and won’t need (as much!) financial support. Equally, in an ideal world you will have paid off your mortgage too, so this monthly cost will no longer be applicable. However, you may need to account for things like care costs as you get older. Essentially, a good financial plan will align your goals with your real-world provisions and expenses, so the first step is identifying each of these categories.

Save and Budget.

If you’re struggling to funnel significant amounts of cash into your investments or your pension pot, it’s a good idea to trim off any unnecessary spending. Your 50s are the decade to really start growing your provisions. You are likely to be at or nearing your full earning potential, so maximise what you are putting aside for later and consider living a little more humbly for a while. A sacrifice or two now mean your retirement years can be truly golden.

Consolidate Multiple Pensions.

The average person has 11 jobs in their lifetime, and this might lead to multiple pension pots. If you’ve worked for lots of different companies over the years, take some time to rationalise your pensions and bring all the funds together. Make sure you check that withdrawing won’t land you with any penalties, though. If you can’t remember what pensions you have, you can use the government’s pension tracing tool to locate them.

Please note that some pensions may have valuable safeguarded benefits which would be lost if you transfer to a new pension. It is always recommended to seek financial advice for this exercise as any safeguarded benefits would be lost on transfer.

Review Investment Portfolio.

As we’ve mentioned, you’re likely to be earning close to your maximum potential income now, so it’s a great time to enhance your investment portfolio. Taking stock at this point is highly recommended because it allows you to make sure your investments are in keeping with your attitude to risk. Wise choices now mean you are more likely receive high returns which can supplement your future income and give you more financial freedom in later life.

Working with a wealth management professional is a great idea because they can provide expert insights and practical support to help you grow, structure, and protect your finances. They can even help you determine how your wealth should be passed on after death.

Pay Off Debts and Mortgage.

To minimise stress in your retirement years, work hard to eradicate as much debt as possible while you’re still working. Paying off your mortgage if you can will also give you greater financial security when you’re older, and mean you have more freedom over what to spend your provisions on. Now is not the point to be using your credit card too much or taking out excessive loans. Try to live within your means and cut back your financial responsibilities.

Increase Contributions within Allowances.

Your 50s are the time to up your pension payments within the government’s annual allowance. For the tax year 2021-2022, this is £40,000. You can carry forward unused allowances from the past 3 tax years, though, so make sure you max out whatever contributions you are able to make. Of course, bear in mind there is a lifetime allowance limit too, which currently stands at £1,073,100. If you’re nearing this figure, you might want to consider funnelling your money into other forms of investment instead. Having multiple income streams is always a good idea anyway!

Plan for Inflation.

Understanding how inflation will affect your retirement is essential, otherwise your provisions may not last as long as you think. A few percentage points won’t seem like a lot year on year. But, over the course of a few decades, inflation could dramatically impact your cash-flow.

Here’s an example of the effect. Imagine you have £100,000 saved. A rate of 2% inflation every year would mean this sum will be worth £66,761 in 20 years. That’s a significant loss! With this in mind, it’s clear that any retirement plan needs to accommodate fluctuations in inflation. If you don’t factor it into your calculations, your lifestyle may become unsustainable.

Inflation can be complicated, so make sure you talk to a financial planner who can do all the research on your behalf. With a chartered professional on your side, you can rest easy in the knowledge that the advice you receive is backed up by real-world experience, expertise, and will stand the test of time.

Consult a Financial Planner.

Working with a financial life planner can streamline your way to a comfortable retirement. At Hansford Bell, we listen to our clients and get to know exactly what they want from their later life. Then, we forecast their finances using the latest software, and scour the market for the best investment options available.

If you choose to work with us, we’ll come up with a personalised plan designed to facilitate your life goals, and help you implement it every step of the way. We then review the plan regularly, making sure it’s continuing to deliver the lifestyle you want.

Sound good? Let’s get started.

Secure Your Future with Hansford Bell.

Hansford Bell aren’t your average team of financial specialists. We take the time to get to know our clients and help them realise what they want from their life, whether that’s a personal ambition or a financial goal.

The road to retirement can seem daunting, but with financial planners on your side, it’s easier than you think. We’ll work with you to maximise your existing wealth and put strategies in place to guarantee your target lifestyle. When the time comes, your retirement should be a celebration, with nothing for you to worry about but enjoying the rest of your life, surrounded by family and friends.

So, don’t leave it all to chance. Have a chat with the Hansford Bell team today.

This newsletter is for information only and should not be seen as advice or a recommendation to act. Please remember that investments can go down as well as up and you may not get back the full amount invested.

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