Never underestimate the importance of forward-thinking, especially when it comes to securing your financial future. If you’re not already planning for your retirement, now is the moment to start. But why the rush?
While retirement may seem a long distance away, there are countless benefits to drawing up your financial strategy early. Here’s what you need to know.
Time is money
Starting your retirement planning journey earlier rather than later gives your money more time to grow.
Let’s say you start putting money into a savings account at 25. As the years go by, you won’t just earn interest on your savings; you’ll earn interest on that interest. By simply allowing this to build up over time, you’ll see your finances grow with minimal effort on your part, boosting your expected income in retirement.
Similarly, investments you make earlier on in life are more likely to generate higher returns.
For entrepreneurs, starting your retirement planning journey early can give you more time to meet your succession goals, no matter whether you want to pass your business down to the next generation or you plan to sell it for a profit.
More financial stability
Retirement planning isn’t just about amassing wealth; it’s about allowing you to live life on your terms. An in-depth strategy will analyse all aspects of your financial past, present and future, helping you set realistic budgets that empower you to meet both short and long-term goals.
Your retirement plan may include numerous strategies, from carefully managing your household expenses and increasing your pension contributions to tackling outstanding debt and developing a succession plan. The more comprehensive it is, the more stable your finances will be.
Weather financial storms
Life rarely goes to plan, but early retirement planning can help protect you against uncertainties. Once you have a solid retirement strategy in place, you can adjust it as your circumstances and needs evolve.
Whether you’re adapting your strategy to accommodate fluctuations in income, unexpected ill health, or shifting priorities, early planning allows you to change course more easily. And if broader economic issues rear their heads in the future, you’ll have the tools you need to weather the financial storm.
Know your retirement timeline
Do you know when you want to retire? Your strategy won’t just make it easier to determine how much retirement income you need and how much you can realistically save; it helps you establish a timeline.
Setting clear, achievable retirement goals gives you something to aim towards. If you have big plans for your retirement or want to spend more time with your loved ones, you may be able to adjust your strategy to help you retire early. As a result, planning ahead could pave the way for more financial freedom later in life.
Reap the tax benefits
Even people with large investment portfolios depend on their pension income to help fund their retirement – but topping up your pension pot can benefit you now, too. Pension contributions are usually tax-exempt, which makes this a particularly tax-efficient savings method.
Furthermore, if you’re an employee, your employer is required to pay at least 3% of your salary into your workplace pension scheme on top of your 8% contribution. If they offer to match your contributions beyond this figure, you may be able to grow your pension pot even faster.
Greater peace of mind
Beyond the numbers, timelines and tax savings, retirement planning offers another major benefit: peace of mind. As the economic landscape continues to shift, setting a plan down on paper helps you feel more in control of your financial future.
A well-rounded retirement strategy can shield you from financial stress, allowing you to look forward to your twilight years.
Now you know the benefits of planning for retirement early, you’re probably ready to start strategising – but where to begin?
As experienced personal financial advisers, it’s our job to help you confidently navigate your retirement. We’ll talk to you about your finances and hopes for the future, using our expertise to develop a bespoke retirement strategy that aligns with your personal goals and stands the test of time.
Reach out to us today to find out how we can help you build a stronger financial future.