If you’ve planned carefully and budgeted for your goals throughout your lifetime, you should have enough money to live the kind of retirement you want by the time you get there.
But what happens if you arrive at your post-work life to find that you don’t have as much as you thought? What if you suddenly realise you don’t have enough to live on? Or, even worse, what if you’ve never done any financial planning, and now you think it might be too late to solve your issues?
If this sounds like you, rest assured that you’re not the only one. According to the Pensions Policy Institute, five million over-50s are set to fall short of their expected retirement income. That’s five million families potentially facing a retirement where they’re unable to afford the standard of living they want.
With so many people stuck in this retirement-income bog, it’s important to know that there are options to help you climb out. Here are some of the choices you have if you’re concerned you won’t have enough to retire.
Work out what “enough” actually is
The first thing you need to do is work out what “enough” actually is for you.
Estimates vary widely over what enough looks like, as it largely depends on individual circumstances. Some say you need two-thirds of your monthly salary as income, while consumer group Which? suggest a figure of £26,000 a year.
Realistically, you only have enough if you can afford to live the kind of retirement you want. So, if you want to travel the world, you’ll need a bit more than if you just wanted to spend time at home with your grandchildren.
Working with a financial planner can add real value here. An adviser can create a cashflow model that shows exactly how much you need to live the kind of lifestyle you want.
If you know how much enough will be but you’re still going to fall short, the next option you could consider is to keep working. This may sound far from ideal, but there are plenty of ways to make this work for you.
There’s no expectation for you to continue in a position of high responsibility. For example, you could consider a consultancy position in your field of expertise. Or alternatively, you could simply reduce your hours in your current job, or even find a more relaxing part-time role.
There are plenty of social benefits from work too, such as the mental health boost from being around other people and having a set routine.
If you think you need to supplement your income, don’t be afraid to keep working a little while longer.
Reduce your spending
Depending on how far behind your target you are, you might be able to recover by simply reducing your spending. This can be a good option if you’re already retired.
Can you reduce the number of holidays you want to go on? Or could you sell a luxury car or another asset that’s a bit more expensive than you can afford?
Create a new budget and see if there’s any excess fat you can trim off your current spending. You’ll be surprised how unnecessary some of your spending can seem when you focus on what you really need.
Downsize your home
Another avenue you could explore is downsizing your home, or just moving to a cheaper property.
Releasing equity in your home could provide you with a lump sum to spend on whatever you need. At the very least, it might allow you to live mortgage free. This could reduce your outgoings in the long term, moving you towards your target.
Change your investment strategy
One strategy you could consider is looking at higher-risk investment options.
By taking on extra risk with your investments, you might be able to increase your returns. This could allow you to give your remaining wealth a boost.
However, it’s vital you take financial advice before you consider this strategy. There’s no guarantee your investments will rise in value, and you could lose the money you invest.
If you’re already concerned about not having enough to live, this could further reduce that amount and have a serious impact on your financial wellbeing.
A financial adviser can help you design a portfolio that carries the right amount of risk for your circumstances.
Work with a financial planner
If you’re truly concerned you don’t have enough to retire, the best thing you can do for yourself and your family is take financial advice.
Even if you’re not in a position where you won’t have enough yet, financial advice can still be very important. In fact, people who draw their pension without taking advice first are three times more likely to run out of money than those who took advice.
As financial planners, we can consider all of these strategies and more to make sure you have enough to retire, and put you back on track towards the lifestyle you want.
If you’d like to find out more about how what we could do for you, please do contact us. Email firstname.lastname@example.org or call 0113 262 1242 to speak to us.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.