Retiring is the thing that all of us look forward to, in one way or another. Whether we have intentions of kicking back poolside with bottomless cocktails or simply indulging our time in a hobby we’ve long overlooked, life after work looks to be a well-deserved reward. However, not many of us are planning for retirement properly. What does it mean to make the money work when it comes to retirement?

Your Financial Picture

To set the stage for your retirement planning, you’ll first need to gain an understanding of your financial situation at present. This understanding needs to be comprehensive, too; where most personal budget spreadsheets start and stop with monthly income and outgoings, this undertaking needs to cover everything. For instance, do you have a mortgage? If so, how much do you have left to pay before you own your home outright? Do you have a pension? If so, what is in it, and can you increase the amount you contribute?

Questions like these will allow you to get a grip on your current position, and the liabilities you may still need to consider when it comes to retirement. Your planning, then, should also include eventual expenses like insurance. Over 50 life insurance is a smart purchase, and one which can protect your loved ones particularly if your assets are slim or your mortgage is still outstanding. The purpose of all this is to get an idea of what you’ll need each month to live comfortably after retiring – and if you can retire in your present situation.

Your Ideal Retirement

Having established your present situation, and worked out what the bare minimum is that you’ll need each week after retirement, you can now turn your thoughts to more aspirational things – particularly, the retirement you’d like to enjoy. 

You may have some base expectations for quality of life after you finish work, even if simply an extension of your present living standards. You might also have loftier aspirations of post-work hobbies and holidays, whether long-term trips abroad or investment in endeavours you enjoy. If you can attach even a vague financial value to all of these, you can set yourself a tangible financial target – and a milestone to meet.

Making Your Money Work

The challenge, then, is achieving your ideal retirement from your present financial situation. How exactly can you make the money work? The first, most obvious and most impactful change you can make is to maximise your pension contributions, no matter how close to retirement you are. Doing so is equivalent to ‘free money’ in the form of tax relief, meaning the earlier you do so the more you can benefit.

If you already have money saved up elsewhere, you might also take some time to consider different options for maximising returns. For instance, larger sums of money could be placed in a global ETF, enabling you to receive capital gains in line with market movements (and often above conventional bank interest rates). Similarly, ISAs can enable you to earn high levels of interest tax-free – in turn meaning more money to retire on.