The importance of planning for your retirement
Don’t skimp on the savings in the years leading up to your retirement.
Retirement comes to most of us at some point. However, thanks to cuts to state pensions and a rising cost of living we don’t all have the same experience of it. It’s difficult to see beyond your more active years when you’re in them but the reality is that a planned-for retirement is far more likely to be the kind you’ll enjoy than one you haven’t even thought about before the age of 65. There are many good reasons why you should plan for your retirement – these are just a few of them:
photo/ Public domain pictures via Pixabay
Avoid retiring in poverty
It may sound dramatic but poverty is likely to be the reality for 1 in 7 people, come retirement time. Large numbers of people don’t have anything set aside for retirement – a 2017 Prudential survey found that 14% of those due to retire in 2017 have no workplace or personal retirement pot. For those relying solely on a state pension to pay for retirement, the annual income from a state pension falls short of the Joseph Rowntree Foundation’s minimum standard by around $2,000 a year. This standard is a benchmark below which retirees won’t have an acceptable standard of living. Planning for retirement is the only way to avoid being stuck in a position where your golden years are cash strapped and hard and where those with a poor credit record may have to resort to unsecured loans like loans for people with bad credit at times of need.
Being able to help friends and family
Successful retirement planning isn’t just about ensuring that you can have all the pets, food, fun and foreign travel you want. For many people it is also a time to be able to pass something on to the next generation and support friends and relatives. For example, you might have enough saved to help a younger relative get onto the housing ladder by giving them a deposit. Or you may decide that a mortgage free property could be used to generate some cash from all that paid off equity to pay for medical care for a friend or to fund a much needed holiday for family. None of this is possible without retirement planning and setting aside specific amounts for defined purposes.
Tax efficient inheriting
Planning for your retirement also includes considering what you’re going to do about assets you leave behind. For example, if your home value is likely to push your estate above the inheritance tax threshold ($424,000) you might want to consider a Potentially Exempt Transfer whereby property is inheritance tax free if you survive the transfer by 7 years. Gifts and bequests, donations and paying off debts all come in to both retirement and estate planning.
Retirement is there to be enjoyed
Retirement planning in advance will give you the means to make the most of time in which you have none of the responsibilities of younger years and plenty of opportunity to enjoy life. Whether that means travelling the world, taking up a new hobby or just spending more time in the garden or with a favourite book, retirement should be about sitting back and reaping the rewards of all those years of hard work.
Author: Amanda Gillam
An unsecured loan is one that is often based on the applicant’s credit history, as opposed to being secured by property or other valuable assets. You may also find that some refer to such a loan as a signature loan.