What are Your Options for Financing Your Retirement?
I think it’s fair to say that we all dream of having a comfortable retirement enjoying the finer things in life. To do that, you will need to put the time and effort into building up a comprehensive savings pot before you give up work entirely. Although there are many ways this can be achieved, it’s important to consider which options will be most suitable given your particular circumstances.
Planning for retirement is never something that should be done on a whim and it’s always a good idea to seek out expert advice before committing yourself to anything. Indeed, with the vast range of products and services there are to choose from you might be grateful to get a little assistance. To give you a helping hand on planning for retirement, I’ve compiled some information about a few of the ways you can fund your golden years.
Unlock Pension Cash Early
Perhaps one of the most effective methods among older people keen to get their hands on extra money as they approach retirement is unlocking pension cash early. This can prove to be a particularly useful option if you want to work part-time for a couple of years before retiring fully and you can get your money as a lump sum or in regular installments.
You can only withdraw funds from a personal or occupational plan – this isn’t something available on public pensions – and once you have received the cash, you are free to spend it however you choose.
If this is an option you are considering, however, you will have to meet certain criteria. As well as requiring a specific amount of money saved up in a pension fund (usually at least £15,000), you will also need to be above the age of 55.
You might also want to think about downsizing as a way of generating money to fund your retirement. I think this is particularly advantageous for parents whose children have grown up and who no longer need a large family home.
By downsizing, you can quickly generate cash to meet one-off expenses and enjoy retired life or pay for ongoing costs like medical care. On top of that, moving into a smaller property may mean you have a lower council tax band and reduced energy bills, something that could enable you to save even more money during your retirement.
If you would rather stay in your existing home, however, I suggest you give some thought towards the various equity release schemes that are available. Opting for equity release means that you can borrow money against the value of your property but will not have to pay anything back on the loan until your residence is sold (this will either be when you die or if you end up going into long-term care).
Selecting this, obviously, means that you don’t have to go through the hassle of moving home and you can choose to receive the cash either in a lump sum or as regular installments.
There are two main types of equity release program to choose from – lifetime mortgages and home reversion plans – so it’s important to get advice from an expert about which scheme will be best for you. In either case, you might find choosing equity release could affect your ability to receive means-tested benefits later in life, so it is not a decision that should be taken lightly.
These are just some of the ways you can finance your retirement, but what steps are you taking to prepare for when you stop working? Leave a comment below and let us know.