Why are the first 5 years of retirement the most expensive?
It’s important to consider your retirement goals and what you will be wanting to do when you stop work. We always hear “I won’t know what to do with myself!” but trust us, you will fill your time pretty quickly!
In the first 5 years of your retirement, you will hopefully still be fit and well, in excellent health and able to do all the things you’ve promised yourself while working hard. But that can be expensive. Consider when you will stop work – if it’s before you’re entitled to the UK State Pension, then you will have a gap to fill.
The top 10 retirement goals we hear most often from those planning retirement…
Everyone we speak to wants to see more of the world by the time they retire. You may have taken holidays from work or visited places while an international worker, but have you explored?
Travel and gap-years are typically associated with students. We certainly wouldn’t expect many retirees to pitch up to a hostel, but most want to see wildlife, world wonders and other cultures when they finish work.
2. Pay off the mortgage and other debts
If you have an interest-only mortgage or a repayment plan extending into your retirement years, you probably want to clear it at retirement. The Pension Commencement Lump Sum (PCLS) is designed to help with this sort of expenditure, and it can be a very good use of money.
The peace of mind of being debt-free in retirement is a common and sensible objective.
3. Outdoor activities and exercise
Walking, gardening and enjoying the countryside are common retirement aims. A lot of those we speak to are keen to get out and about and keep themselves healthy.
4. Modernising the home
It’s difficult to get things done on the house while working full time. Whether it’s a DIY project or a major renovation, modernising the home is a common retirement objective.
5. Craft & workshop hobbies
Whether you’ve got your eyes on a loom or a new angle grinder, craft and workshop activities are popular with new pensioners. From a production line of rugs to stained glass windows, these hobbies can be expensive as well as rewarding.
6. Moving house
Many people begin to think about their ‘forever home’ at retirement. Some consider downsizing after a few years, but want to enjoy their bigger family home while they can. Will you be due the arrival of grandchildren and want to host big family parties while you are able?
Moving house, particularly downsizing, is often a goal for the second stage of retirement, but should be considered a major junction in your long term financial planning.
7. Learning new skills
Music enthusiasts who only achieved Grade 4 at school often like to try again for the orchestra when they retire. Be it languages, music or a specialism you’ve always admired, we often hear of the desire to learn a new skill to keep the brain active.
8. Personal projects
Building a kit car, starting a social activity group or entering into local politics are just some of the personal projects we help plan for. Many people dream of new achievements to keep their ambitions alive once they stop work.
9. Gifts to family
By retirement, a lot of people have children and grandchildren with wide eyes and open hands. It’s nice to treat loved ones and give them a financial head start.
We often help people plan gifts to family and loved ones for a first home, education or help getting out of debt.
10. Classic, sports and luxury cars and other personal ‘treats’
These are often an to fit an ideal lifestyle. If you’ve been checking out that new car, boat or holiday home, these need to be factored in to your retirement plan!
Do you share any of our top 10 retirement goals?
Most goals aren’t financial, we have to work out together how much they will cost.
Whatever your retirement plans, conduct a health check of your finances well in advance of retirement. Understand your UK State Pension entitlement. Review your pensions and make sure you’re on target to achieve the perfect early retirement years.