Your financial situation undoubtedly changes when you retire. Your income is likely to fall as you leave full time or part time work and spending patterns also change - there may be less travelling expenses, mortgages are often paid off and more leisure time can result in a change of hobbies.
Retirement offers an opportunity to spend more time with family and take more holidays but if it also sounds like a daunting prospect financially then here is some advice on being prepared.
Work out your likely pension income
It’s important to know what your income is likely to be in retirement, so if you pay into a private pension, contact the company to find out your estimated pension.
State pension: The government website will provide you with information on your predicted state pension but make sure you claim any state pension entitlement as it won’t be paid to you automatically. Also check whether you’re entitled to pension credit or other available benefits. Visit www.gov.uk for more information.
Savings: Look at your savings and decide how much of your savings that you would like to spend per month in retirement. Also look at the interest you will earn on any savings and factor this interest into your income.
Create an expenditure budget for your retirement
You can estimate and prepare for many changes that might take place. E.g. Do you want to join a gym? Reduce your commuting costs? Take more holidays? Factor such changes to create a budget that will help you estimate how much money you would be looking to spend every month. Don’t forget to include additional funds for special events such as birthdays and possible contingency funds for spending such as unexpected house repairs.
Examine your spending
Are you spending more than you would like? Take a look at your bank and credit card statements to help pinpoint any over spending. Highlighting the areas where you are spending more than you thought will help you to make a more accurate budget and implement changes to your spending.
Identify possible cuts in spending
If it looks as though money may be tight in retirement think about making some lifestyle changes – changing where you carry out your weekly shop, finding the cheapest energy suppliers and cutting down travel costs can all contribute to cutting costs.
How Teachers Building Society can help
Savings: Teachers Building Society provides a range of savings accounts – including easy access accounts and Cash ISAs. For more information visit our savings page.
Mortgages: Teachers Building Society has a range of mortgages available for buyers up the age of 70 and a Teacher Later Years Mortgage which is available to teachers - retired and nearing retirement - up to the age of 83 (maximum age of 70 at time of application). For more information click here.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Teachers Building Society is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registration number 156580