When you're retired, money is undoubtedly a key concern – or more specifically, how to make sure you've got enough of it, with many worried that their money won't last. After all, giving up work (either wholly or partially) means your income could reduce considerably, so how can you make sure your money goes as far as possible in retirement? We've got a few ideas…
Your savings will play a huge part in your retirement, with many using the funds they've saved up over their working lives to provide a valuable income stream, often by withdrawing set amounts of money on a regular basis or using the interest from those funds to supplement other forms of income.
That's why it's vital to find the best savings account for your needs. This could be a fixed rate bond if you've got a lump sum you want to grow over a few years, or perhaps a notice account if you're willing to plan your withdrawals in advance. You'll of course need an easy access account for last-minute purchases or emergencies, and having an account that pays interest monthly could be ideal. Just make sure that monthly interest can be paid away into your current account to maximise your income-earning potential.
Don't forget about your cash ISA, either. Hopefully you've been using cash ISAs as a primary pension saving vehicle, which means you can now reap the rewards of all that hard work. Again, you need to make sure your ISA savings are working as hard as possible, and you may need to transfer your funds in order to do that – make sure you're getting the best ISA rate, and find out how to properly transfer a cash ISA to retain its tax efficiency. You may even want to consider stocks & shares for the potential of even greater returns…
Stocks & shares ISAs have the potential for far greater returns than their cash versions, for the simple reason that your money is invested in the stock market, rather than being kept in cash. This means the risks are also far higher, as you could end up with less than you put in.
However, with the returns on stocks & shares ISAs vastly outperforming cash last year – our research found that stocks & shares ISAs delivered returns of 15.8% over the 2016/17 tax year, compared with an average cash ISA interest rate of 1.01% – this could be a good trade-off for some. Just make sure you really are comfortable with the fact that you could lose your investment. Find out more about stocks & shares ISAs by reading our guide, and see if it could be worth considering for your retirement.
Equity release is going from strength to strength at the moment, with 2016 being a record year of lending and 2017 on course to surpass even that. It could be a great option for those who want to make the most of their property wealth without needing to downsize – it allows you to free up some of the cash locked up in your home by taking out a lifetime mortgage, offering the chance to get a lump sum in return (which could be ideal if you want to pay off debts or make home improvements), or the option to release equity as you see fit (perhaps as a way to supplement your income).
It could be a great way to make your money go further in retirement, but it of course won't be for everyone. Find out more about equity release and whether it could work for you by speaking to our no obligation equity release service, or read our guide for a handy overview.
It goes without saying, but your pension income will be vital when you're retired. This includes your state pension as well as your personal one – hopefully you've built up a valuable workplace pension over the years, which can now be used to provide an income for the rest of your life.
However, the pension freedoms mean it's more important than ever to carefully consider how you'll use and access that pension money. You may want to opt for income drawdown, giving you the chance to access some of your cash while keeping the rest invested; you could want to cash it in entirely; or you may want an annuity to secure an income for life.
For many, an annuity could still be a viable option, as it's the only way to secure a guaranteed income from your personal pension savings. This is why it's vital to shop around to get the best annuity rate possible, thereby ensuring your income is topped up to the highest level. Contact our annuity planning service for a no obligation chat and to see what's out there – annuity rates are edging up, which has helped average retirement income hit a 33-month high, so it's certainly a great time to consider your options.
Find out more about stocks & shares ISAs, equity release and annuities – and make sure you've got the best savings rates possible – to make your money go as far as possible in your post-work years, so all you've got to do is enjoy them!
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