Even if you’re very good at making sure you live within your means, you’re sure to find that giving up work will shake up your finances.
For a start, you’re likely to have a lot less money coming in and you might find that your expenses are very different to the ones you had when you headed off to work every day.
Help ease the transition from working life to retirement by making sure you’re prepared to keep your finances in order.
Assessing your situation
The first step to ensuring you’re ready for the changes that lie ahead is sitting down and working out what kind of financial position you’re in. Do you still have mortgage payments to make? Will you receive any income aside from a state pension? Have you got any investments or savings accounts that could be put to better use? Having a firm idea of the assets available to you and the potential bills and expenses coming your way can help you plan ahead for the many years of retirement you hope to enjoy.
Once you’ve worked this out, it’s time to create a budget that will allow you to take control of your money. Knowing how much money you have to spend and all of the things you need to spend it on is the best way to make sure you don’t accidentally run out of money for the important bills and can also leave you feeling much more secure about your future. If you’re not sure how to get started, the Money Advice Service offers a very useful Budget Planner Tool that will take you through the budgeting process step by step.
Your budget will help you manage your finances and can be a very valuable way of making sure that you are able to afford your long term goals as well as short term necessities. However, it isn’t always easy to adjust to a new spending plan. The Post Office offers a handy tool in the form of its Budget Card, which allows you to put a little bit of money aside in an account that won’t allow you to go overdrawn and has no fees or charges associated with it. This makes it a nice way to pay off your bills without worry.
Taking positives and negatives into account
Planning your budget also gives you the opportunity to see where some potential pitfalls and also some benefits to your new way of life. It’s true that many people will experience a drop in income when they retire, but you’ll also be able to enjoy a reduction in tax and there will be a lot of work related expenses that you no longer have to pay. This could be anything from saving money on the daily commute to being able to eat more cheaply at home.
There are also a variety of options open to you for boosting your income, if you find that your post-retirement funds don’t live up to your expectations. You may want to consider the possibility of releasing equity in your home or you may find that the idea of setting up your own business is a tempting prospect.
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