They say 50 is the youth of old age. But when it comes to retirement planning subsequent years will be pivotal to ensuring a happy, healthy and financially stable retirement.
Whether you plan to retire at 55, 65 or 75, at 50 you will need to make sure your plan is on track. It is never too late to start saving towards retirement but by 50 the clock is ticking. If you are only starting to put money aside then you will need to maximise how much is being squirreled away each month.
Here are a few tips for those wanting to get their pension plans in order.
1. Set out your goals
It is important to have clear plan of what you want to achieve. Set out a budget for what you will need to live on to enjoy your retirement. Pool together all your pension pots, savings and other sources of income, such as the state pension.
David Stevens, of insurance provider LV, said there is still time to bolster your nest-egg as long you have your target in mind.
Your 50s are a good time to maximise pension contributions because your earnings are likely to be near their peak and you will have paid off some big expenses such as a mortgage.
He said: “Typically for most of us there are trade-offs between how long you plan to work, lifestyle and finances that need to be made, but beginning to put some shape on these and writing them down is helpful.”
This includes the way you may want to take your pension, for instance if you plan to take out an annuity or keep your savings invested in the stock market and live off the income.
2. Know your access
A whole range of options open up to you from the age of 55, as you have the freedom to access your pension savings. You can take 25pc of your pension as cash and tax free. Anything on top will be taxed the same as income.
Just because you can access your hard-earned retirement money does not mean you should, warned Tom Selby, of AJ Bell, a pension provider.
The earlier you access your pension the longer it will have to last – and if you draw too much you risk running out of money in your later years.
He said: “Assuming a saver with a £100,000 fund needs £5,000 a year to fund their lifestyle, with the income going up each year in line with 2pc expected inflation.
“If they achieve investment returns of 4pc after charges, their fund could be expected to last around 25 years. For someone taking an income from age 55, that implies running out of money by 80.”
— to www.telegraph.co.uk