Only 30% of people at retirement age can boast of having a financial plan for long term care, with far fewer having made any kind of arrangement for what happens after their death.
Life at retirement can be very difficult without sufficient planning. At retirement you no longer have to work, so you have more time to spend money. The smart person plans ahead, not relying only on the equity in their home, government pension schemes, and family and friends for a fulfilling old age.
You have to plan and manage your financial resources so that they accommodate your entire retirement, future care expenses, perhaps, even your funeral arrangements. Here are some of the ways you can prepare your finances so that you can have more peace of mind when it comes to your retirement.
Make a Retirement Budget
It is important to start saving money from your earnings for your retirement as soon as you start working, or as soon as possible. It doesn’t matter if you begin working in your twenties or thirties. A tax efficient way to do this is by funding a personal pension.
Your pension provider will claim tax relief and include it in your pension bucket. Plus, you can even control where you want your contributions to be invested.
If your employer also offers a pension, then even better, as you will get to enjoy dual income streams when you retire. Add those to your state pension and you are on your way to a fulfilling retirement and old age.
Take Out a Life Insurance Policy
Your retirement and old age should be peaceful and free of worries. It is the time when you need to concentrate on doing things that make you happy. Having toiled through your earlier years, there is no better way to congratulate yourself.
So why worry about what happens to your children or wife if you die early when you can take out a life insurance policy? You should have life insurance policy and critical illness cover before retirement, and if you can get it, at retirement, to cover any loss of income your family would incur in the case of your early death.
Plan for your health and long-term care
At old age, the likelihood of being afflicted with sicknesses like cancer, arthritis, hypertension, dementia, cardiovascular disease increases.
Sometimes your pension may not be enough to cover this. 1 in 3 women and 1 in 4 men over the age of 65 will go into care so you have to ensure that you plan ahead for this, as care home fees can reach around £25,000 to £55,000 per annum. Speak to a financial adviser as this is a complex area.
Prepare a will
Having a will is crucial because you don’t know what will happen tomorrow. It may not be death, but you have to consider the possibility of not being able to make your own decisions due to mental impairment; Alzheimer’s disease an accident etc.
Having a will drafted is the best way to control what happens to your estate, business, and savings; not only in the case of death, but also in the case of your declining mental health.
Here are other reasons why you should prepare a will early:
- To minimise estate tax.
- To ensure you estate goes to whom you choose.
- To prevent disagreements among the people you leave behind.
- To ease the grieving process.
- To reduce probate.
- To maintain a small business.
- To make donations to charity organisations.
- To select a guardian for your children.
- You never can tell when you might die
Prepare your funeral expenses
A lot of people, when planning for their old age, don’t fancy including a funeral arrangement, probably because such a preparation brings to mind the inevitability of death. But then, whether you lay down any plans or not, your death is an eventuality, and funerals can be very expensive. The cost of a funeral has risen 92% in the last 11 years.
Perhaps you prefer cremation to burial. Or you want your body to be laid to rest in a particular cemetery. Or you are an optimist and just want your body frozen indefinitely until science comes up with a way of resurrecting the dead! All of your plans should be discussed with your family ahead of time as there is a lot that goes into the planning of a funeral.
Taking out a funeral scheme by paying a lump sum or installments to a funeral provider, or get a plan from a finance company, is a great way to prepare for your own funeral.