2020 has been a difficult year for many of us. As it draws to a close, perhaps it’s an appropriate time to focus on the things you can control and think about the action you could take to improve your finances in 2021 and beyond.

This article provides an overview of 4 areas for you to consider:

  1. The Rise In The State Pension Age
  2. Life Goals
  3. When Can You Afford To Retire?
  4. Investing Principles

1) The Rise In The State Pension Age

At one time, the retirement age for men and women differed – this is no longer the case.

For those born between 6th October 1954 and 5th April 1960, you will be able to start receiving your state pension on your 66th birthday. For anyone born after this, the goal post is moving, with a phased increase to age 67 in 2028 and age 68 from 2037.

Why the change?

The simple answer is, on average, we are living longer.  Therefore, the Government must make changes to accommodate longer payouts.

What are implications?

If you had your heart set on retiring in your mid 60’s (or earlier), you will need a source of income to facilitate this.  In any event, the current State Pension of £175.20 per week (as at 2020/21) won’t stretch very far – could you manage on this alone?

State Pension Age

2) Life Goals

What lifestyle have you envisaged for your retirement?

Ask yourself:

  • How will your life be different in a year, 5 years, 10 years from now?

  • Do you have the security of knowing where you are heading financially?

  • Do you have a complete understanding of your financial position?

  • What is ‘your number’ to make your current and future lifestyle secure?

2020 has shown us just how quickly financial situations can change as a direct result of circumstances outside of our control.

Taking the time now to map out your life goals and make plans for the short term, medium and long term can help, if necessary, get things back on track.

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3) When Can You Afford To Retire?

Now I’ve got you thinking about your life goals and dream retirement, when was the last time you actually sat down and worked out how much money you will need to achieve them?

For many, the answer is never, so there is no time like the present to get started:

  • What do you anticipate your monthly outgoings to be during retirement?

  • Have you contributed to any company or personal pension schemes? If yes, what are they currently worth and what are their projected values at your ideal retirement age?

  • Do you have any other investments? What are they worth / projected to be worth?

  • What is your State Pension Age? Are you up to date with your National Insurance Contributions?

  • Do you have any unused tax allowances from previous years (you can go back up to three years)?

This is a very simple example of the sort of questions you need to be asking to help you establish your current and projected financial position.

4) Investing Principles

How is your investment strategy coping with impact of the COVID-19 pandemic?

  • Will your current investment strategy still deliver sufficient income to meet your desired lifestyle at the right time?

  • Is your portfolio diverse enough to ride out such unexpected ecomonic challenges?

  • Are you taking advantage of tax-efficient investing?

  • Have you considered automating your saving process? (watch video below for more information)

Summary

This article briefly touches on a few areas to consider when it comes to building towards your ideal lifestyle. The latest TT Wealth Newsletter “Financial Action Plan” covers these and several other topics in more depth and also includes a specific section called: ’10 Steps To Help You Build A Better Financial Future’. To download the guide, simply complete the form below.

Remember, when it comes to making financial decisions, you don’t have to go it alone. To speak to an experienced Financial Advisor, contact Tony Thomas on 07585 592494 or tony@wealthmasters.co.uk

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