5 Steps to a happy retirement

1. Start saving as early as possible

The sooner you begin building your retirement savings, the more time your money has to grow through compounding interest. 85% of retirees underestimate how much money they need to live a ‘comfortable retirement’, and that’s now even worse with 12% inflation and a cost of living crisis. If you’re between 50 and 75, you need a NEW financial plan to counter the new challenges you face.

2. Take full advantage of any tax benefits

a) Stocks and Shares ISA

You can invest up to £20,000 each year through a stocks and shares ISA for you and your spouse; that’s £40,000 completely tax-free.
You can invest a further £9,000 each year in a Junior ISA for your child(ren), which can be used in future as a deposit for their house. So, you can help your children without sacrificing your own retirement pot.

b) Self-Invested Personal Pension (SIPP)

You can invest up to £40,000 each year, and the Government will top it up with at least another 20% of whatever you pay in. So, if you invest £10,000, the Government will give you £2,000 for FREE.

c) Self-Employed Business Owners

A corporate account allows you to invest money in your limited company without drawing it out in dividends. So, you can access your cash and make it work for you without paying income tax or corporation tax.

3. Manage your debt

With UK interest rates at 4% from just 0.1% in 2020, London Stone Securities are already seeing an increase in mortgage defaults and bankruptcies.

a) Pay off any credit card debt. This is the worst type of debt to have.

b) Mortgage Debt. Analysts are predicting house prices to fall 10-20% by 2025, so make sure you are not over-leveraged because the banks could call in their loans. Down-size if necessary before it’s too late.

4. Invest your money

This is the most important step because it’s the one that you have the most control over. You can significantly improve the value of your retirement pot by how you invest. You could catch up with a superior investment strategy even if you started investing late.

If you invest wisely and at the right time, you can quickly accelerate your retirement fund. But a substantial retirement fund can rapidly deteriorate if you don't invest wisely. From October 2022 to February 2023, the UK stock market increased by 16% and paid out dividends of 1.4% and 17.4% in less than six months.

But most people missed it, and so too did their advisors. Whether you’re 55 and planning for retirement or 75 and mid-ret retirement, you can change things today.

5. Monitor and change when necessary

a) Regularly review your retirement plan and adjust as your life and financial circumstances change.

b) Plan for the unexpected. Create an emergency fund to cover unexpected expenses and ensure adequate life cover.

c) Change your portfolio and strategy to reflect the change in market conditions. Be proactive rather than reactive, and use a reputable advisor.

Extra tips from the professionals

Ask your financial advisor to review your current investment strategy and goals and create a new 5-year plan. (Cost = £299).

Ask your tax advisor to review last year’s tax returns and make your financial assets and portfolio more tax-efficient, including IHT planning. (Cost = £395)

Ask your investment manager to review your stock ISA and SIPP and propose a new strategy with more income, better diversified, less risky, and offers more return.(Cost = £349)Total Cost = £1,043

OR London Stone Securities can do it all for free.

PLUS, YOU’LL GET A FREE COPY OF OUR BOOK DIVIDEND INCOME PLUS, WORTH £34.95.

https://londonstonesecurities.co.uk/retirehappy

London Stone Securities is a local, FCA-regulated wealth management firm based in Richmond and Central London. Since 2008, London Stone Securities have been helping UK residents to build successful retirement plans through our team of financial advisors, tax experts and investment managers.