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Your retirement

Retirement planning has changed dramatically and people have more freedom and choice.

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Key questions to ask yourself about your retirement

Thursday, January 21, 2016

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You may be below, or even well below, retirement age right now, but thinking ahead to how you'll manage for money when you retire, what you'll do with your new-found spare time and where you'll live are just a few of the key questions you should be considering. Here we look at four of the common issues people coming up to retirement age should be tackling.

How will I manage my money when I retire?

The Organisation for Economic Cooperation and Development (OECD) states that the net UK pension will be worth 38% of a worker's average salary when public and private pensions are combined.

However, when voluntary contributions are included this could rise to 61% meaning the more money you can put aside now into your pension pot, the better it could be. However, many people aren’t doing enough to save for their retirement.

"More than half of people in the UK either aren’t saving at all for their retirement or they aren’t saving nearly enough to give them the standard of living they hope for when they retire," says the Money Advice Service.

Where will I live when I reach retirement age?

If you are still paying mortgage, or the rent on your house would not be sustainable on your pension, you may consider moving elsewhere. You may even want to move to be closer to your family, or out of the city and into the country.

Overpaying a mortgage just by a small amount each month now can pay dividends, by reducing the interest burden and leaving you with a far greater share of equity in the future, or helping you to pay it off far quicker. This could then help you release cash by downsizing to a smaller and more suitable property that is mortgage-free.

You may even consider renting out your existing property as another source of income. Be aware, however, that the recent increase to Stamp Duty for Buy To Let purchases makes it more difficult for those approaching retirement age to look to invest in property to fund their retirement.

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What will I do with my spare time in retirement?

Whether it's volunteering, taking up a new hobby, spending more time with the family or travelling the world, there are so many options open to you when you decide to retire – you may even feel overawed by all the choices.

But losing the routine of work can often leave you feeling at a loose end, so it’s a good idea to start thinking about what you would like to do during your retirement now.

Writing down and researching new avenues for enjoyment, or starting new things in the years before you get to retirement age will help you focus on what might make you happy.

According to Cristopher Kellett MSc, Physiotherapy Lead at Progress, The Cambridge Centre for Health and Performance, it's just crucial to stay active.

For example, if you used to walk to work, don't give that up. Go out every day for the same length of time and the same distance.

"One of the things that is particularly important is for people to be active,” he recommends. “Research demonstrates that inactivity can lead to deterioration in mental health. Sport provides comradeship; it promotes a bit of healthy competitive spirit and there are the obvious physical benefits."

Do I have to retire?

The Government has now phased out the previously default age for retirement, which was 65, meaning people can choose to retire when they decide the time is right.

If you want to continue working for longer then you can't be discriminated against. In fact, your employer has a responsibility to discuss working options, such as flexible working, with you.

Many people are now choosing to retire and then pursue their passions, such as starting a business, opening a hotel or pursuing a new career in arts and crafts.

"As longer working lives become the norm, the role of the over 50s to our economy will become increasingly important to both business and society. Enabling older people to contribute their skills and talent through enterprise and employment is something none of us can ignore."

It’s never too early to start considering how you want to spend your retirement and how you will finance the life you envision for yourself and your partner. If you start planning for your retirement now by asking yourself these questions, it could help you have the retirement that you want.

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