Retirement – 5 tips to retire earlier

retirement

As the Monday arrives, do you find yourself daydreaming about going to the beach, the golf club, spending more time at home, being anywhere but the office? You are certainly not alone in dreaming about a life without work, but making that retirement dream a reality doesn’t come cheap.

Review Your Retirement Plan

Do you know how your retirement fund/pension is invested? Do you have any idea whether it made money last year, or how much? Shockingly, thousands of people have no idea where their retirement money is invested. Worse still, much of it is often languishing in poorly performing “lifestyle” funds or other badly managed funds that barely earn enough to keep ahead of inflation. Use this opportunity to move your pension into funds which are more likely to make you money. If you are reading this and have not yet started paying into a retirement plan – act now! You are unlikely to ever reach your retirement goals unless you have a pension in place. Research has proven time and again that those who start saving early – almost regardless of differences in earnings – are able to retire earlier.

Generate Passive Income for Retirement

When it comes to wealth-building strategies, there’s no hotter buzzword at the moment than “passive income.” And passive income can do much to quell retirement fears and achieve retirement goals. Investopedia defines passive income as “earnings an individual derives from a rental property, limited partnership or other enterprise in which he or she is not actively involved.” Popular culture, however, defines it as “any money you earn while sitting on a beach sipping mojitos.” One of the most popular ways to generate passive income is to buy (or finance) an income-producing rental property and become a landlord. Investing in rental properties is an effective and time-honored way of earning passive income. Nonetheless, it often requires more work than people expect. Popular investment property markets include UK, Australia, USA and Europe. Often buying and managing an investment property from overseas can take up a lot of time. There are many different companies touting the next favorite location, some which may not have your best interests at heart. Seek professional advice from a company which has experience, a positive track record and will tell you the upside and potential downsides.

Get a better return on your cash

The most financially savvy are, not surprisingly, often the most well off. Understand as much as you can about how and where to save, how and where to get advice, what investments to make, charges, and how to put your savings and investment plan into action. There are few permanent truths in investment. The proposition that if you want a better return you have to run a higher risk is unfortunately as near to the truth as you can get.  If you want to be sure of your money you do need to place it on deposit in a strong bank, and make sure there is a deposit protection scheme in place which covers it.  To get a better return than the current near zero rates on offer you will need to lock your money up for longer. Banks and other financial institutions offer a higher rate of interest if you are prepared to leave your money with them for a year or two. The longer you let them have it, the higher the rate they usually pay. As long as interest rates remain low you will not get a great rate of return from any deposit. That is why many savers are tempted to take a bit more risk in search of a better return, which could be by way of investing in bonds or equities. Naturally, investing means taking on risk in order to receive superior returns. Ensure that you seek professional advice from a qualified and licensed advisor and ask to see the track record of the investment.

Consolidate Pensions

The average person will now have around 11 jobs over their lifetime. This means you are likely to have started paying into more than one company pension scheme. If you have worked in the UK you may be able to consolidate these retirement plans and make sure all your pension money is working as hard as it can. Even if there is small fee for transferring the cash, it is probably worth doing as you can then invest it properly and more efficiently – particularly as you won’t be paying separate annual charges in each scheme. This may translate into the benefit of lowering your retirement age to 55 years old.

Protect your wealth

You should buy life insurance when you care deeply for someone or want to make a difference in the world, and your financial resources aren’t able to fill the financial gap if you were to die. Many financial experts consider life insurance to be the cornerstone of sound financial planning. If people depend on your income, life insurance can replace that income for them if you die. The most commonly recognised case of this is parents with young children. However, it can also apply to couples in which the survivor would be financially stricken by the income lost through the death of a partner, and to dependent adults, such as parents, siblings or adult children who continue to rely on you financially. Life insurance can pay off the remaining mortgage so your partner can live in the family home without financial stress. If you would like further information about what you can do to help build a happy, financially secure retirement, speak to a qualified, licensed financial advisor.


CHRIS LAND, FINANCIAL ADVISOR

Chris has 9 years’ experience as a UK pension specialist and licensed financial advisor. He specialises in helping clients make balanced financial decisions to grow their personal wealth.

Chris is licensed with Globaleye, an award-winning international financial advisory firm established in 1999, with 10 offices and 15,000 clients worldwide.


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