The Importance of Retirement Planning
Planning for retirement is a critical task many of us tend to overlook or postpone. Despite numerous media reminders and government initiatives, the mentality of ‘dealing with it tomorrow’ is surprisingly common. The fact that we’re likely to live longer than we anticipate makes this worrisome.
Today’s near-retirees face more opportunities and challenges than previous generations, along with a myriad of ways to fund their retirement, which can often lead to confusion.
Living Longer
In 1900, life expectancy at birth in the UK was only 46 years for men and 53 years for women. As of the years 2018-2020, this has increased by approximately 30 years, reaching 79 years for men and 82.9 years for women (source: ONS – National life tables). The increased likelihood of us living longer into retirement raises a critical question – will we have enough funds to maintain our desired lifestyle throughout retirement?
Planning for Late Retirement
While some of us plan for our pensions, very few consider the phase of ‘late retirement,’ a period from our mid-70s onwards, when our expenses could rise faster than our pension income. This could occur due to an increased need for home assistance or nursing care, unexpected expenses like home repairs or medical costs, or even a more active lifestyle involving travel and leisure activities.
Furthermore, inflation, a long-standing foe, consistently erodes the value of our money over time.
Planning Ahead
Addressing this issue has driven much of the recent innovation in the retirement market. Seeking reliable financial advice during different stages of retirement can help pinpoint which products can generate the income you need.
While it may seem far off now, devising solid financial plans for late retirement will provide peace of mind during your early retirement years, ensuring you can maintain the lifestyle you want further down the line.