Retirement is undoubtedly an exciting time, a milestone to reach after years of work, but it is crucial to be approached in advance in order to enjoy the years ahead. It is crucial to have clear plans for retirement, to understand what long-term goals are, and to find out how much money is needed to enjoy a reasonable standard of living in old age. However, in addition to careful planning, it is also important to be able to cope with changes should they arise.
Many people dream about retiring at 55: early retirement, contrary to what you might think, is not a luxury reserved for the lucky few, but something you can achieve if certain choices and strategies are adopted, such as saving during your working years.
Thus, with early retirement, you will have plenty of time to pursue your passions, such as travelling, starting a new hobby or simply enjoying life with your family.
If you want to retire before the age of 66, the average retirement age in the UK, it is good to know that you have to make some sacrifices along the way. However, here are a few tips to help you prepare for retirement in the right way.
Evaluate your spending habits and debts
To live the retirement period in a carefree manner, it is important to calculate your spending habits precisely. Therefore, monthly expenses such as telephone, electricity and water bills, subscriptions and rent/mortgage, but also costs for leisure and entertainment, such as dining at a restaurant, travelling or giving your grandchildren a present, should be considered.
Furthermore, knowing what is the average pension pot might also help you to understand how much you will have to save each month to meet your financial commitments.
To avoid being faced with too many expenses during retirement, it would be desirable to have paid off your debts such as your mortgage or any financing.
Split expenses in spending categories
Another good idea is to divide the expenses you will face during your retirement years into three categories. Maybe, you can identify your expenses in essential, comfort and luxury, in order to rationalize your spending of money.
In the first category, you can add to the list costs about groceries, mortgage or rent for your house, transports, household items, clothes, shoes and health products. Expenses such as holidays, activities for leisure and recreation belong to comfort category, while luxury expenses can be considered long-haul holidays, SPA and beauty treatment, dinner at fine restaurants and buying a new car.
Keep active and devote yourself to hobbies
Some people are afraid of running out of money when they retire. It is true that this can be a worry, but the risk of becoming bored or not having the right motivation to face life could also be a challenge at this time of life.
Beyond the financial aspects, living a happy retirement also means being able to cultivate hobbies, spend pleasant free time with loved ones and keep active. For this reason, even in retirement, many people decide to occupy their time by continuing working as counsellors, for example, or to work part-time.
Spending time with others, and especially with loved ones, brings considerable benefits. According to the Mayo Clinic, in fact, adults and older people who live in a rich social network have a lower risk of experiencing health problems, such as depression. Moreover, older people who have a richer social life tend to live longer than those who are more isolated.
You shouldn’t undervalue the independence that comes with retirement, which allows you to follow interests you have always had but never had the chance to pursue.