BY JOHN ELLIS, FINANCIAL ADVISOR
Retirement is no longer seen as the end of a productive life but the start of something new. In this era of extended life expectancy and a desire for active, self-defined retirements, it’s crucial to prepare for this new chapter of life. Today’s retirees could enjoy two to three decades of life after work.
Retirement doesn’t mean sitting idle; it’s a transition to a new phase in your life. This is the time to explore your interests, engage with your community, and pursue the dreams that may have been on hold. It’s an opportunity to join clubs, seek further education, or even turn a hobby into a business. Retirement can be all about realizing your long-cherished ambitions and looking ahead with optimism.
Your health is your true wealth, and maintaining it should be a top priority during retirement. Staying physically active is essential for longevity. Engage with your doctor to make healthy lifestyle choices; join walking groups, play sports, or embark on fitness adventures. Incorporate suitable weight-bearing activities and maintain a diet rich in calcium and vitamin D for strong bones and a fit, mobile life.
Physical activity not only ensures physical health but also enhances mental well-being, helping you stay sharp and engaged in your retirement. Mental activity is just as crucial as physical fitness. Keep your mind active by doing crosswords, reading books, playing strategy games, or learning new skills. These activities protect against cognitive decline and help reduce the risk of conditions like Alzheimer’s and dementia. Your retirement is an exciting new chapter, and maintaining a positive attitude toward your health and well-being is key to making it a fulfilling one.
Whether you’re a few years or just months away from retirement, it’s essential to fine-tune your finances. Know what to expect regarding your retirement income. Seek projections from your financial advisor, and consider additional income sources, such as investments, part-time work, or consultancy. Create a realistic budget to ensure your projected retirement expenses align with your income. If there’s a shortfall, it’s not too late to bolster your pension pot. Review your investments, assess your risk tolerance, and decide how you intend to use your pension savings.
Deciding how to use your pension pot is a critical aspect of retirement planning. You have the following primary choices: lump sum with an annuity, or approved retirement fund (ARF). A lump sum allows you to take up to 25% of your fund, and you can use it for various purposes, such as paying off a mortgage, home improvements, or travel.
However, be aware of the taxation rules, which vary based on the amount taken. An annuity guarantees a lifelong income, while an ARF offers flexibility in managing your investments and tax-efficient income withdrawal. Consult your financial advisor to determine the best option for your situation.
The age at which you can access your retirement benefits depends on your specific retirement plan. Personal pensions allow benefits from age 60, with the flexibility to delay until age 75. Personal Retirement Savings Accounts can be accessed as early as age 50 or 60, while company pension schemes typically align with the company’s retirement age. State entitlements vary by birth year and are available at ages 66, 67, or 68, depending on your birth date.
In conclusion, retirement today is a gateway to an exciting ‘Second Life’. As you embark on this journey, prioritise your health, make informed financial decisions, and choose the right path for funding your retirement. Embrace this new chapter with open arms, as it’s the beginning of something remarkable. Live your Second Life your way, and make the most of every moment. Your adventure is just beginning!