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Planning Retirement Online

 

Retirement Planning – Timelines

 

Age 50

 

Timeline Introduction
Age 20
Age 30
Age 40
Age 50
2-3 years before retirement
 
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Number 50 candlesAge 50 is the time when we should start making serious plans for retirement. We may have many years still to work but, on the other hand, many of us retire in our 50s for one reason or another.

Hopefully, we will retire because we want to and feel that we are in a position to. Unfortunately, some people are forced into it through ill health or because they are made redundant and cannot find another job. Whatever the situation, we need to be prepared for it and 50 is a critical age for that preparation.

As always, we should review our retirement notes that we have been keeping, talk them through with those close to us and bring them up-to-date. We should think about the same issues as we did at 40 but with some extra dimensions this time. Also, remember to factor in anything that has changed since the age of 40 or anything that is likely to change. Look at the Introduction to Age 40 for some examples of things that might cause you to think about retirement differently.

If you are coming to this guide at age 50 or so, make sure that you read the earlier sections so that you are fully aware of the areas you should be planning and then continue to read this section. If you are already using the process, still have a recap before moving on to read the rest of this section, which looks at the different aspects of retirement that you need to start thinking about at age 50.

What we want to do in Retirement

Our retirement plans are centred on what it is we want to do in retirement. There is no point in planning for retirement to the detriment of our current situation if we don’t need to. On the other hand, if we have great ambitions for our retirement that may well affect what we are prepared to sacrifice now.

At age 40 we took another look at our Hopes and Concerns, Hobbies and Travel and also considered our Objectives. We need to do that again now we are at age 50 and refine our thoughts on these topics. In addition, we need to add two other heading to these things

Opportunities.

Opportunities may well be the same as our hopes, but if we think about the opportunities that may open up for us once we are unconstrained by work, it may add another dimension to our thinking.

Consider what kind of things may be possible when we have so much more time available. There may be things that we haven’t considered before because of their sheer impossibility. Will they still be impossible or will they come into the realm of the possible? Think about things in this way and different areas may well open up.

Values

Whilst we’re thinking about all those things that we might want and be able to do, it is essential that we don’t lose sight of those things that are important to us. So think about what it is that will form the absolute bedrock of your retirement, things without which the whole edifice will crumble.

If they are the bedrock, they will take time in retirement and they may take money, so we need to consider them carefully before we start making grandiose plans that might weaken our foundations.

Finance

We need to think about all the financial aspects of retirement that we have thought about before as well as some others. We need to consider whether our anticipated finances will allow us to do all the things that we want to do in terms of our Objectives, Hopes and Opportunities (including travel). This means a root and branch review of our finances. (It may also be the right time to consider talking to a financial advisor, if you haven't done so before).

We need, therefore, to get (as applicable) a company pension forecast, a personal pension forecast and a state pension forecast. The first two will be provided by our employer and pension provider respectively. Your entitlement to the state pension may be provided by your employer but, if not, you can get a forecast from the Pension Service.

Also, review your other investments, if you have any, and see if you can estimate how much they may bring you at or during your retirement.

Once we reach the age of 55, we can in theory put a pension into service for the first time. If you are considering early retirement at that age, you need to take stock and consider what implications that has for finances in retirement and whether you need to change your financial strategy in retirement in view of it.

Budget

Financial GoalsHaving obtained these forecasts we should now be in a position to start a budget for retirement. Think about all your income and all your expenditure both currently and, as best you can, in retirement. The latter won’t be entirely accurate, of course, but it should give you a feel for what the situation will be like. Having done this, we can then get a rough comparison of our financial situation now and when we are no longer working.

This may well prompt some rethinking of our retirement plans or it may confirm in our minds that we can achieve everything we want to do. If the former is the case, we then need to think about what we are going to do to ‘square the circle’. Do we lower our sights or do we plan to do some paid work in retirement in order to fund our ambitions? We might even delay retirement until we can afford to do those things or we may be able to carry on in our current employment but with reduced hours, part-time working or job-sharing. These options may well be worth exploring with your employer. However, there may be outside factors that mean that we have to retire or, having set our hearts on retiring at a certain age, we may be very reluctant to change that plan.

Once we have started our budget, we should keep it up to date and amend it as our situation alters.

Lump sums

If we have either a company or a personal pension, we will be entitled to a tax-free lump sum when we retire. You need to decide how much lump sum, up to the maximum, you wish to take. This is a very personal decision and one that only you can decide. It will depend upon what your hopes etc are for retirement, what your attitude to money is (if you are afraid you’ll blow it all, it may be better not to take the maximum!) and what you may need to buy in the near future.

We can also defer our state pension for between one and five years in return for a lump sum or a bigger pension when we do come to take it. Again, this is for you to decide based on your own circumstances.

Health Insurance

This is something else under the Finance banner to think about once we are 50 because, for many people, health is a concern. It may be that we have health insurance through work, which will stop when we retire or we fear that it will get prohibitively expensive once we are at retirement age.

If you have health insurance paid for through your organisation you may be able to continue with the same provider, without losing any cover for pre-existing health conditions. However you are likely to find that it will cost more for the same benefits and/or benefits will be restricted outside of the company scheme. The one thing that you can be sure of based on recent years is that premiums will grow significantly faster than the rate of inflation every year.

Whatever our situation, we need to consider whether health insurance is something that we need to do something about. Many people decide to, effectively, self-insure. They set up a separate account which they might call the ‘Health Fund’ and then add to it an affordable amount each month. For others some of the schemes now available provide a variety of levels of insurance such as those that pay out if treatment cannot be carried out by the NHS within a certain period of time.

Children and Grandchildren

One way or another, children and grandchildren are likely to cost us money, so take them into account.

It may be, too, that we want to leave them something, which means that we may be affected by inheritance tax (IHT). Have a look at the HMRC introduction to inheritance tax to find out more about IHT and to see how to plan for it.

Work

At age 50, we need to stop and think about work because it is likely that there will be some critical decisions coming up. Amongst the issues that we need to think about are:

  • Do we want to change jobs? If we do and we leave it any longer it will get very difficult to do so. If we do, what implications are there for pension rights?
  • Do we want to try to increase our skill set whilst we are work, either as a way of staying in work longer or of having more skills when we retire?
  • Do we want to stay in work but with reduced hours or part-time work or do we want to retire completely from our career?
  • Do we want to find part-time and/or voluntary work when we retire? If so, what do we want to do? You may like to have a look at the Jobs and Work section on the Laterlife web site to see how to go about finding paid or voluntary work in retirement.
  • What are the good things that work has given us over the years? If we are not going to work in retirement how are we going to get those good things?
  • Do we want to start our own business in retirement? (One of six new businesses in the UK is started by the over-50s.) This might include franchising, for example.

Health

As we get older it becomes more and more important to think about our health. We have looked at this issue in earlier sections but now we are 50 we need to take a much more serious look at it. If we are unhealthy, it will be more difficult to have a happy and fulfilling retirement.

Once we are past 50, the body does, unless we look after it, get less efficient, less flexible and more prone to break down. We therefore need to ensure that this process is minimised and we can do this by taking some exercise and eating healthily.

Age UK (a very good organisation for the over-50s) talk about keeping fit in four areas once we are over 50. These are:

  • Stamina
  • Muscle strength
  • Flexibility
  • Balance and co-ordination
So review your lifestyle and ensure that you are doing something on a regular basis to look after those aspects of fitness.

They also talk about diet in terms of eating:
  • More fruit and vegetables
  • More starch
  • Less fat
  • Less sugar and sugary drinks
  • Less salt
So again, take stock and consider if your diet is a healthy one.

We also need to think about keeping our brains fit and healthy.’ If you don’t use it, you lose it!’ So we need to consider how to keep the brain active once we retire. We can take up hobbies that keep us thinking and/or we can get some continuing education somewhere.

Think about how you might like to keep mentally fit and factor that in, in terms of finance and commitment, to your retirement plans.

Moving House

Moving house is something that many people do in retirement – many of them very soon after retiring. As with all other aspects of retirement, it’s a personal decision and one that we obviously talk about with those closest to us.

If you do decide to move, remember that it can be a very expensive process, so factor in the costs before making the decision. Remember, too, that when we move we risk losing our networks and it is sometimes difficult to build new ones. So think carefully about it before you take the plunge.

Relationships

Once we retire we will almost certainly lose the vast majority of those friends and acquaintances that we had at work. This won’t happen overnight but it will over a period of time. We will also lose the social contact that we have with colleagues and other people on a daily basis at work.

So we need to think about how to maintain our level of social contact and not become isolated. We clearly need to get out and meet people and, if we do this, it will also help us to keep mentally and, to a certain extent depending on the activities that we do, physically fit. Consider how to do this so that we do things that we enjoy, go to places that we want to go to and make social contact. We’re not necessarily talking about making deep and meaningful relationships (although we might do); it’s rather the fact of getting out and about, meeting new people and making new friendships through the social contact.


Lifestyle

As at the earlier stages, we need to ensure that we have the right balance to our life.
We want to enjoy the present but make some provision for the future. We might well decide, at age 50, to tilt the balance slightly in favour of making provision for retirement because it is looming ever nearer.

Conclusion

There are lots of things to think about in terms of retirement planning at age 50. It’s a critical time, partly because all sorts of things could happen to us that might cause us to retire in our fifties and partly because we need to start thinking about retirement anyway.

Like any other planning, it’s no good leaving it too late, especially with the financial side of things. There is, of course, a very good argument for saying that neither should we do it too early. However, with retirement planning we keep our notes and our budget to hand so that we can be flexible and change them if and when our circumstances change.

With luck, we will be retired for more that 20 years. We need to be prepared for those years so that we make the most out of them.

NEXT STEPS

 

However if you feel that you need some help from a financial advisor, then visit our section on obtaining financial advice, or our page on Laterlife selected services and associated advice.

 

   
 
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