Retirement is something that most of us look forward to but ensuring that you have enough money for the biggest holiday of your life requires proper planning, and it pays to start as early as you can.
The first place you might start when considering to invest for retirement is in a pension. Today there are two types of pension saving – a state pension and a private pension. However, these can be complementary elements as your state pension can provide a base level of income on which your private provision can be built.
To find out more about the different types of pensions and how you can contribute to them, you can download our guide here.
Another investment opportunity to consider would be to put some money away every month into a tax-efficient wrapper, such as an ISA. This is a great way to build up a sizeable pot either instead of or in addition to your pension. Then, when it comes to retirement, you can choose to keep your money invested until you need it which will give it more time to grow.
We would suggest that a diversified portfolio of different investments is the best way to build up your savings for retirement. You may wish to consider putting this together yourself, however, you may need experience in analysing different types of shares and other assets that could build up your portfolio.
It’s important to consider the value of income when investing for retirement. For example, both shares and bonds can pay you a regular income, which in turn will boost your pot if you choose to reinvest the money. In later life, you may choose investments that will provide you with an income to live on meaning that the original investments will stay untouched and allow them to grow.
Investing for retirement can very much depend on what you want to get out when you do come to retire. Most people want flexibility and control over their money, as well as growth and limited risk. But it’s important to understand how much money you will have when you retire based on your current position and what you need to do to achieve your lifestyle ambitions for the future. For this, we use cash flow modelling to determine how much investment you will need to make in order to reach your financial goal.