What to
do if you haven't saved enough for retirement
Look,
unfortunately it happens to some people. Usually, they are clients that come to
us a little later than they probably should have or their circumstances have
changed since they set up their pension. It quickly becomes apparent that with
their current retirement plan, they are going to fall short of achieving the
lifestyle they want or have become accustomed too, in their later years.
This can
happen for a number of reasons – not having a plan, starting to save too late,
not saving enough or deploying a poor investment strategy. So, what can you do?
Take
control.
Maybe you have drifted and gone of course, it happens! There is no
point fretting or procrastinating about saving for your retirement. Grab the wheel and speak to a
financial adviser about what you can do now. This will make you feel better
about your situation and improve your financial wellbeing. By focusing on what
you can achieve rather than worrying about what you should have done gives you
a much better chance on making your retirement the best possible.
Here are some suggestions to consider…
Save harder
Plan a simpler retirement
Maybe you
just can’t really afford that place in the sun, instead you might have to
settle for a shorter holiday each year. There’s no point having no life today
in order just to build the ultimate retirement. It’s really important to strike
the right balance between building the future life you want, while also
enjoying today. Sometimes it’s best to lower your sights of life in retirement.
Work longer
Due to the
wonders of modern medicine, most of us should be healthier through our 60’s and
70’s than the generations before us and will be well able to continue working.
Don’t rule this out as a means to a better retirement. If you need to make up a
shortfall in your retirement savings, start thinking about how you might keep
working longer than you originally intended, even on a part-time basis.
In a recent Irish survey 52% said they wanted to keep working in retirement even if they were financially comfortable. (Standard Life, 2021).
Review
your investment strategy
Handle this
one with caution, this is where you need really excellent advice! But reviewing
your investment approach might be part of the solution. This would need to be
very carefully considered, taking into account your investment timeframe both
pre and post retirement and your attitude to risk among other factors. But be
very careful. Seeking greater returns generally means taking more risk, and
this is definitely a double-edged sword…
Look for
some BIG savings
Downsizing
to a smaller home in the area may possibly be the answer to your financial
challenge in retirement. If your home is fairly big and your family have flown
the nest, do you still need the space? Maybe having a smaller garden to
maintain will be a benefit too in your later years. Moving house may just
unlock the retirement lifestyle that you really want.
While some
of these suggestions might not appear to be very attractive, at least you have
some options and can take control of your future. Now is the time to consider
them, as the longer you delay, the bigger the challenge becomes.
Revenue can be your friend too. Tax relief is available at your top rate for up to 35% of salary between age 55 and 59 and 40% from age 60 (max salary allowed €115,000, 2021 tax guidelines).
If you can't save 40% of your salary nearing retirement, will you be able to manage a bigger drop in income after you stop working?
Arrange a meeting with Mind My Money
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