As each year goes by it becomes increasingly more difficult to retire at an earlier age compared to the generation before. There are many factors working against us such as rising costs and inflation, bad financial advice, volatile stock markets and time itself. Many governments are now increasing the age of when you can retire. For many people they will need to work past the age of 60 to maintain a decent level of living. However, if you plan ahead you can be better prepared for the future.
First of all you will need a pot of money that can generate enough income for you and your dependents to live on. This can be achieved through a combination of financial products such as traditional pensions that can either be a personal one or a pension with your employer.
However, there are a number of other ways to boost your pension income than using the traditional pension method. For example, Individual Savings Accounts or ISA’s can provide another saving and income generation alternative. The unique advantage with these is that the income generated through an ISA is tax free meaning the government will not touch it. ISA’s are also quite versatile as you can use them as a tax free savings account or use them as a tax free vehicle to invest in stock market shares. The investment ISA can either be managed by a professional financial management company. ISA’s also give you the option to pick and manage your own share portfolio. If you have any experience on picking shares then this is definitely a good option to build your pension income for the future.
If you have a mortgage it is prudent to get this paid off as soon as possible. If you have surplus income consider using this money to pay off more of your mortgage each month. By adding an extra £50 or £100 each month can considerably reduce the length of time and cost of your mortgage over the long term.
Devise an investment plan that includes all your investments and your financial goals and how you are going to achieve them. This should also include your expenses which you need to monitor on a regular basis. The plan should also provide a road map in how you invest your surplus money each month and your attitude to investment risk. For example, if you are in your 20s or 30s you can take more risk whereas someone in their 50s should take a more conservative approach to their investment plan.
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