This is a very subjective question of course. Each of us have unique dreams and goals for our retirement and those dreams are dependent on what makes us happy as individuals. But there are structures and processes which we can all use to secure and prepare for that safe and rosy future.
We prepare for every part of our lives – whether it is what book to read next, where we will go on holiday, or how we will pay for our children’s education. Retirement is no different, but over the last three decades its cultural significance has changed due to technological advances and social importance. As retirement has become more dynamically important within everyone’s lives, preparation has also become a necessity.
Being a pensioner used to be considered as just an end-of-life phase. A time perhaps when you had just enough money to get by and life was just about existing on the periphery of the real world. Now, in the 21st century, it is very much the third stage of life (after education and work) and should be just as much about learning and enjoyment as any other time in your life. The social and cultural changes have occurred because we can look ahead more clearly and prepare for future times; advancements in medical science means people live longer and illnesses in old age are easier to deal with. Better technologies and communications mean we are likely to be able to do the things we have always wanted to do. So now we just have to prepare for the opportunity.
A future vision
Whereas we will all have different ideas as to what our retirement will look like, there are specific factors we all have to deal with. For instance, where will we be living? Are there hobbies we will want to spend more time on? If so, how will that happen? Who will we be with – will we want to be living nearer our wider family or away from the rat-race? Do we want to be able to explore geographically or try new sports or concepts? Or is retirement simply a time to get away from it all, relax and soak up the sun?
Having a clearer vision of how we want our retirement to look like allows us to prepare more precisely. This vision is likely to change over the years and as we get nearer to pensionable age, we are more likely to have a clearer idea as to what we really want. But keeping it front of mind and monitoring finances throughout our careers is essential.
Finances of course are central to a well-prepared retirement. If the money is not there when we retire, then our dreams will be out of reach too. Lack of income may well restrict basic creature comforts.
Even in the early 21st century, when the prospects for retirement appear to be so good, young people rarely take this period seriously – unfortunately, it is too distant and too vague a time in the future. So how can we secure finances for that long-term future?
A contribution to a private pension is taken from a salary, the employer also contributes and the employee receives tax relief. The most popular pension is the defined contribution pension (above) but there is also the defined benefit pension where pay-out is dependent on salary and years worked for a company.
Happiness is not always found through fun and games alone. It sometimes comes from doing those things that need to be done. As much as you will be looking for relaxation and play there is also a need to feel validated. To continue to feel a part of the community perhaps or doing work for someone else that offers psychological rewards. As much as we may well look forward to the time when we can leave professional work behind (as a way of making an essential income), there are benefits from work which we all may find useful for a balanced lifestyle:
Some hurdles to keep an eye out for when considering your financial future are:
Retirement has been with us for a long time. The difference now in the 21st century is that if we prepare for it optimistically throughout our lives it can be far more than a “tag-on” at the end of our working days. By keeping it front of mind and preparing for it from an early age, we can structure a safe and happy time.
We are authorised and regulated by the Financial Conduct authority. This means we can help you to make the best possible decisions when it comes to your pension.