The wellbeing benefits of smart retirement planning

09/02/2022 / Liberty news

When you think about retirement, the chances are that you have some sort of emotional reaction to it.

It might be fear and anxiety, or perhaps excitement and optimism, depending on your distance from this milestone and how prepared you feel.

That’s not surprising. After all, retiring is a major life event, along with entering the workplace, getting married and starting a family, among others.

So it makes sense that taking a positive approach and planning for retirement can make a difference to your wellbeing, both before and after it happens.

Prepare for peace of mind

A large part of financial wellbeing is about building confidence, according to Tony Clark, Senior Propositions Manager at St. James’s Place.

“You don’t need to have lots of financial knowledge or understand technical details about products, you just need to know you’re doing something and making good decisions,” he says. “That in itself creates the sense of confidence that you’re building something.”

The increased control we have over retirement these days can be a double-edged sword. On one hand, it puts a lot of pressure on us to make the right choices, with the risk of poor outcomes where professional advice hasn’t been sought.

On the other hand, it gives us more options, such as being able to have more say over when we retire.

Having a preferred retirement age is just one example of an objective that can make it easier to prepare properly.

“It’s important to have a good understanding of what your retirement looks like for you – not anyone else – and how to get there,” says Tony. “Do you want to retire at a certain age, or whenever you feel ready? Having objectives and putting a plan in place for them helps to generate a sense of wellbeing.”

One step at a time

A lot of people put off long-term saving because they’re unsure about what they can and can’t do, how products work and whether they’re good value. But taking simple steps can put your mind at rest and help you feel confident about the future.

A big part of feeling assured that you’re doing something positive towards retirement is to get into a regular savings habit. This is particularly the case at a time when the pandemic has made more people aware of the strength of their financial position and what they can do to bolster it.

“Over the past couple of years, we’ve seen lots of hardship, but also people taking the opportunity to clear debts, overpay their mortgages, increase their savings and generally build their financial resilience,” notes Tony.

Those regular savings may contribute to meeting your short, medium and long-term goals. The products you use will fit into those different goals. For longer-term objectives such as saving for retirement, pensions are the obvious place to start, not least due to their tax efficiency.

If you’ve taken out a workplace pension, it’s likely that your employer is paying into it too, while the tax relief available on pension contributions is a generous government incentive to save as much as you can.

You can also build up your ISA investments over that time, while property may play a part as well.

“At the same time, you’ll want to ensure you have cash you can access as an emergency fund,” says Tony. “You might feel that pot of money isn’t working hard, but it’s serving a different purpose and meeting a different objective.”

Heart and head

Retirement is an emotional subject, and the decisions made around retirement plans can be heavily influenced by how we feel about it, potentially resulting in behavioural biases and poor outcomes.

One way to prevent your emotions from derailing your retirement plans is to take advantage of the professional perspective and speak to us.

“An adviser can help you identify your objectives, see what you’re trying to achieve and put a plan together to get you there,” says Tony. “Once you’ve done that, you can feel confident in doing more to address your own needs.”

Enjoy the wellbeing benefits of financial planning – speak to us for advice on how you could achieve your goals for retirement.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

The levels and bases of taxation, and reliefs from taxation, can change at any time and are generally dependent on individual circumstances.

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