If you’re in your 40s or 50s, you probably find yourself thinking about your retirement. In fact, you might be looking forward to it; after all, you can then spend more time with your family and friends and have the opportunity to travel, take up new hobbies and do other things you’ve always wanted to do.
But don’t just focus on the fun and adventures you’ll have. If you want to enjoy a comfortable and smooth-sailing life in your golden years, you need to ensure you’re not making mistakes that can ruin your retirement. These blunders include:
- Refusing to downsize your home
There’s nothing wrong with having a big house and living in it right now, but this might no longer be the case when you retire. This comes from the fact that maintaining a huge home can take up a large amount of your energy and resources — two things that you can’t really spare when you’re in your 60s and 70s. Keeping equity in your property can also be a bad thing, especially if it’s the largest asset in your portfolio. By allowing most of your money to be tied up in your house, you’re actually preventing yourself from investing in stocks and other high-yield vehicles, getting bigger earnings and being more financially prepared for retirement.
But don’t just plunk a “For Sale” sign in your garden and start looking for buyers. Before doing anything else, sit down and ask these questions:
- Should you sell your home? If you’re an empty-nester, you can sell it now and put the profits in stocks and shares. But, if you’ve already paid off your mortgage, you might want to continue living in your house instead of buying another property and facing another set of mortgage payments.
- If you sell your home, should you renovate it or not? Renovating can increase the value of your house (as long as you make the right changes!), but they also cost a substantial amount of money up front.
- If you decide to keep your home, can you rent it out? Becoming a landlord is one of the ways to earn from your property without letting it go. Decide if you’ll rent out just a couple of bedrooms or the entire house.
- Not giving much thought to your pension
You probably already know that your employer has enrolled you in a pension scheme. But, if you don’t know anything beyond that, it’s definitely the right time to take a closer look at your plan and make any necessary changes to it.
Start by identifying the kind of pension you have. The two most common types are defined benefit (aka final salary) and money purchase, and both of them can be divided into further classifications. Once you find out what scheme you’re enrolled in, seek the help of a financial adviser to know how you can make the most out of it.
One company you can call is Pensionhelp. They provide professional and personalised pension advice in the UK and assist their clients in making the right decisions based on their needs and lifestyle. Since they specialise in many areas of pension planning, they can cater to almost all your enquiries. If you’re thinking of getting a final salary pension transfer, for example, they’ll evaluate your current financial circumstances (as well as your plans for the future) and determine if it’s the right step for you. If it isn’t, they’ll come up with other solutions that will help you improve your pension and be more ready for retirement.
- Thinking long-term care insurance doesn’t matter
No matter how hale and hearty you are now, you can’t really predict what your wellbeing will be like tomorrow. With this in mind, you need to look for a good health insurance, a product that will assist you with long-term care. This way, you won’t have to worry about money when you fall ill, and you can focus on getting better and regaining your strength. You also won’t have to fret about your finances if you’d have to live in a nursing or residential home since you know your insurance will cover the costs. (To give you a frame of reference, residential care home fees can reach more than £28,000 annually while nursing home fees can climb up to more than £37,000 a year.)
Stay away from these mistakes to protect your retirement plans and enjoy your golden years to the fullest!