Pensions are like most things in life; ultimately the results will be influenced by your commitment to good planning and preparation.
It is important to take the pension plunge and get started as early as possible and as young as possible.
The pension planning journey is unique to all of us! Hopefully all the time and effort you put in now will help to provide for a significant number of memorable and enjoyable years later.
Good planning and preparation will help you to remove the need to even think about getting lucky by winning the pools or the lottery. Even the potential to inherit wealth is less certain these days, as the cost of living continues to rise and we all live longer.
To begin retirement planning you need to understand your financial starting point, “Where am I now?” Then it’s important to make a projection way out there in and future and predict, “My retirement plan!” In simple terms “The Gap Years” in the middle is where all your actions over the forthcoming years will determine the financial quality of your retirement.
A simple model as an overview may look like this. So, think of “where I am now!” as my present moment starting point. “The Gap Years!” are your years of planning, preparation, commitment and action. “My retirement plan!” is the cumulative effect of your work during “The Gap Years”.
“Where am I now?” > “The Gap Years!” > “My Retirement Plan!”
Retirement, “what do I want?”:
So to fill the gap with quality, get used to either asking good quality questions or finding someone who will. Great questions will take you to the heart of your pension matters.
• How much income do I want in retirement?
• What is the impact of inflation on my desired pension income?
• What is my life expectancy?
• How many years do I expect to enjoy in retirement?
• Who or what else will support me financially?
• How much do I have to save?
• Out of ten, how committed am I to my pension plans?
• What is the cost of delaying?
The value of more research.
Once you get started you will be bombarded throughout the gap years with decision points that can seriously affect the ultimate value of your pension fund.
• So do extra research prior to making any buy/sell investment decisions
• Do even more research prior to choosing or moving pension provider, or choosing pension release
• Allow your research to guide you prior to defining or redefining a retirement strategy.
Keep up-to-date with your fund’s performance a minimum of once per annum, if you want any chance of keeping to the retirement plan. Many things that you should keep in mind during a review will affect your future pension fund’s value including:
• Employee/employer contribution levels
• Contribution holidays
• Sickness and early retirement
• Taxation and
• Charges (including fees & commissions)
Review your decisions.
Make time to take responsibility for reviewing your pension planning and investment decisions.
Get started with your retirement plan before it’s too late. The cost of delay, should you choose to explore it, can be both motivational and frightening.
Missing a year of contributions at the front end is potentially the most damaging, because they are the contributions that get the compound benefits year-on-year right up to retirement.
Remove the excuses for standing back and allowing your pension and other assets to underperform.
If you do make decisions quickly and like to rely on recommendations then realise you are giving up on a lot of vital components we discussed above. In the long run, good planning and preparation will save you time and make you money.
Be empowered – do say “No!” if an investment does not look right to you.
Its good to talk and talking pension matters through or taking advice from a suitably qualified individual that is more expert in the area of pensions than you can really help.
A lack of planning and preparation for retirement can and does result in reliance upon the state pension and having to make do with a minimum income. Stories of pensioners freezing and not being able to enjoy quality nutrition fill the front pages of our papers.
Do not rely on luck, the lottery or the pools, for those matters. Do not put your retirement planning control outside of yourself and rely on inheritance or others.
Keep pension planning to as simple a model as you possibly can. So, think of “where I am now!” as my present moment starting point. Remember “The Gap Years!” are your years of planning, preparation, commitment and action. Then, “My retirement plan!” is the cumulative effect of your work during the gap years.