Unsurprisingly, there is plenty of emphasis on finding out how to stay young and all sorts of other related topics as we grow older. It’s only when the aging process well and truly kicks in that most of us start to think about our finances. In reality, this is probably too late but as the saying goes, better late than never.
There are a lot of misconceptions doing the rounds about growing old, and a lot of people almost think that everything clicks into place. Sure, you might be contributing to a pension, but by the time the retirement age arrives there is no guarantee that this is going to be large enough to support you and your family for your remaining years.
Bearing this in mind, today’s guide has been pieced together on what not to do with your money as you grow older. There is plenty of advice out there which might give you hints and tips, but in the midst of all of that try and abide by the following “don’ts” which should help you emphatically as you bid to retire comfortably.
Don’t misinterpret your new financial position
Firstly, don’t fall into the trap of misinterpreting your new financial position. You might have a good idea of what your income and expenses are now, but all that’s going to change in the future.
A lot of people focus on the changing income (i.e., going from a salary to a pension in their later years), but in reality, their expenses are going to change as well. They will have expenses like elderly care, university fees – and will even have to find out how to pay for the cost of a funeral. It all adds up and looks very different from their current situation.
Don’t “let your pension take care of itself”
We’ve already touched about pensions and made the point that a lot of people think that things work out for themselves. Sure, you might have contributed to your pension for decades, but this certainly doesn’t mean that it is adequate to take care of you for your remaining years.
Unfortunately, there’s more to pensions than just contributing the minimum amount each month. This might work for those of you who are paid particularly handsomely, but for the most part, it’s not going to be enough. If you max out your contributions, your employer will do the same – and this equates to free money. Not only that but don’t leave your pension sitting in the same scheme if you have the option to change it. There are umpteen types of investment options for pensions, and some of them will sell your hard-earned cash short throughout your career.
Don’t just rely on your pension
Following on from the above, it’s hopefully become loud and clear that there is more to your retirement life than just a pension. Again, if you happen to be lucky, this might cover you. On the whole, it’s probably not going to be enough, or at least not enough to dictate a “comfortable” standard of life during those latter years.
As such, consider other options. Experiment by investing your money through your career, rather than saving it. Or, when retirement does come, perhaps start a phased retirement. Some people will even switch to a completely new, but part-time career, to give themselves a little more financial leeway in those latter years.
By just relying on your pension, you are putting a lot of pressure on one, probably small, pot.