7 ways to make the most of your retirement fund

It might seem like a lifetime away but it’s never too early to start thinking about what you want your retirement to look like. Planning for the future will not only give you peace of mind, but also means you can actively look forward to a comfortable retirement.

It is important to start mapping out your finances for later life as soon as you can, so you don’t have to play catch-up in the run-up to retiring. The right type of advice can make a huge difference – and at Wellesley we are here to support our clients in effectively planning their future. Here, we look at the key ways in which you can ensure a financially secure life after retiring:

1. Start saving early and often

The time value of money can be a very powerful thing; saving just a small amount each year beginning early in your career can significantly impact the value of your investments over the long term. For instance, starting saving £100 per month from the age of 45 would mean you had deposited £24,000 by the age of 65. Assuming a 7% annual yield, this pension pot would be worth £51,040.61 at the age of 65. However, this same pension pot could be worth £117,606.49 if you had saved the same amount from the age of 35 (with the same yield), or £248,551.65 if you had started saving from the age of 25.

2. Ask your employer about a pension-matching scheme

People aged 22 and over who earn more than £10,000 a year are now automatically enrolled into their employer’s workplace pension scheme. They currently have to contribute 1% of their salary per year, and their employer must contribute 0.8%. However, research from Royal London suggests that around 3.2 million people are failing to take up this offer – missing out on additional contributions of £2 billion, and losing out on an extra £650 of free additional income every year.

3. Have an emergency fund in place

It’s not just a case of simply having a ‘rainy day’ fund to cover unexpected repairs – emergency funds will help you maintain stability across a range of unforeseen circumstances, such as job loss, a change in relationship or unexpected medical expenses. We recommend saving enough to live on for roughly three to six months, ideally in a separate savings account. An emergency fund can also limit the need to access longer-term investments or use high-interest debt.

4. Keep it simple

When investing for the future, it’s important to remember that a complex investment approach doesn’t necessarily translate into a successful approach. Having a fully diversified portfolio through a number of investment options can make it easier to monitor your portfolio and make adjustments when necessary. Here at Wellesley we can create bespoke portfolios to suit each client’s different needs and attitude to risks.

5. Keep it safe

Although it might be tempting to access your retirement assets for short-term goals or to fund key events, you must resist the urge. The longer you can keep your assets invested, the more you’ll have available to meet important goals in the future – as shown in tip #1.

6. Retirement planning doesn’t end at retirement

People work hard to prepare for retirement, but often have to adjust to their new lifestyle. There may be changes early in retirement, so continuing to monitor your retirement plan is just as important as when you were focused on saving for retirement. Things change over time; people get married, have children, change careers and move home. This way, you can make any necessary adjustments so you can stay on track towards your retirement goals.

7. Create a financial plan

The final and most important tip when it comes to thinking about retirement is to plan, plan, plan! Retirement can sometimes seem like a long way off, but the earlier you start thinking about the future, the better position you’ll be in when you retire. Consider different scenarios, work out what money you’ll have coming in and think about how your spending might change once you’re retired. This can help you plan properly and gain some helpful context for savings targets and understanding the impact of investment returns.

Establishing a plan with an adviser will help keep you on track to meet your financial goals and provide peace of mind that you will receive the life you want in retirement. Here at Wellesley, our role is to guide you through the available options and help you create a plan to ensure a comfortable future. We can also monitor your plans over time and adapt them to any changes in circumstances.

For more information

If you have a question about receiving financial advice, or would like more information about our services, please contact Wellesley Wealth Advisory on 01444 848508 or via email at info@wellesleywa.co.uk.

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