Making your retirement money last longer in retirement

You’ve nearly made it; retirement is just around the corner, and you are starting to think about how to spend your free time. Retiring is a massive milestone representing years of hard work and financial planning to secure the later years you’ve dreamt of. So now what? Go on a once-in-a-lifetime holiday or spend a small fortune on that sports car you’ve always wanted?

I am not here to burst anyone’s bubble by saying don’t do all the things you have looked forward to for the last 35+ years of working; just make sure that you aren’t doing so at the cost of undoing all that hard work. You are now at a stage where you have stopped working to accumulate income and must now work to ensure that your ‘pot’ lasts you and you can maintain the lifestyle you want to live.

Here are my five top tips to ensuring you make the most of your golden years.

1. Start with a plan

The foundation of a successful retirement begins with a comprehensive financial plan. Review your current financial situation, including your savings, investments, and retirement accounts. Calculate your anticipated expenses in retirement, breaking this down into the essentials and the nice-to-haves. Pull all this together to understand how and when you will use each pot of money to fund your lifestyle.

This can be overwhelming and a challenge to know where to start. Seeking advice from a financial adviser can be beneficial to understand the best way to ensure you are accessing your money in the most tax-efficient way. The goal is to plan to ensure your money outlives you.

2. Emergency funds are still important

Up until now, having an emergency fund has been important to cover unexpected costs or loss of income, such as losing your job. While you may not have a job to lose anymore, emergencies still happen, and failing to have a backup can mean that you make knee-jerk decisions with your money that could cause potential issues for years to come.

3. Side hustle your retirement

Not everyone hits retirement age and wants to completely stop working. In fact, the idea of slowing down can be very daunting, and that loss of purpose can be challenging. One way to help both your mental and financial health is finding a way to make money out of something you enjoy.

Many individuals gradually reduce work commitments but continue earning through hobbies, specialised skills, or consultancy work. Leveraging decades of expertise can lead to income well into retirement.

A couple who I know well have both recently retired and found themselves at a loss with what to do with their time. She has started an Etsy business selling personalised mugs and gifts, meanwhile, he volunteers at a local wildlife park one day a week as zookeeper of the lemur enclosure (my daughter loves going to visit)! Just because you have stopped working doesn’t mean you can’t find new ways to fill time and stay busy doing something you love without breaking the bank.

4. Leave the pension till last

When we think of retiring, we immediately think about our pension in isolation. After all, for years we have been funding it with the specific purpose of saving for retirement. However, it can be advantageous to utilise other investments that we have available first before depleting our pensions. Pensions have a unique advantage in that any remaining funds can be passed to beneficiaries without contributing towards a potential inheritance tax liability. So, exhausting other assets and leaving your pension to grow tax-efficiently before dipping in could be beneficial.

5. Slow down and enjoy the small things

You have worked hard to get to this point and want to enjoy every moment. The initial excitement will probably lead to expensive dinners and lavish holidays, and it is best to enjoy this while able to. As you begin to settle into the new normal, you will find that everything gradually slows to a more enjoyable pace, and you take enjoyment in the little things such as having time to spend with loved ones instead of holidaying or trying some recipes you have never found time to make instead of expensive meals out.

Making your retirement funds last requires careful planning, prudent decision-making, and a willingness to adapt to changing circumstances. By following these strategies, you can enjoy a secure and fulfilling retirement while preserving your financial well-being for years to come. Remember to regularly review your financial plan and seek professional guidance when needed. With careful attention and proactive management, you can make your retirement funds last a lifetime.

Whether you are just starting to look at setting up a pension or want to review the provisions you already have in place contact Yorkshire Financial Planning on 01482 275540 or complete our contact form here.

The value of an investment with St. James's Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.