When plan to leave the working world and enter retirement, it’s more than just choosing to bring your career to an end. It is very important that you make sure that you plan your finances before retiring. This is particularly important if you are planning an early retirement. In some cases, working for an additional couple of years could make all the difference. The last thing you want is to retire and find that you do not have sufficient funds to support your usual lifestyle.
Prior to retiring, you should set up a meeting with an independent financial advisor to discuss your options. They should draft up a balance sheet that details everything from your assets to your liabilities in order to calculate your total net worth.
Next, you will need to pay off as much of your debt as quickly as you possibly can. The less debt you have weighing you down, the better for your finances and stress levels. Interest on credit cards and loans have a way of building up, and it’s easy to get in over your head. When you get all of your debt paid off, you will need to calculate your basic current cost of living. Remember that, as you age, you will normally require more money to maintain your lifestyle each month. Expenses like food, water, and electricity go up regularly, and you might find that you need additional medical care. In fact, at some stage, you might need to move to a long-term care facility and, again, this costs money.
There are no quick ways of planning for the future. You need to keep all of your options open including equity release. An equity release is an excellent option to keep in mind, and it’s always a good idea to have your home reevaluated periodically. By knowing how much your home is valued at, you will have a better idea of how much you will be able to release. Taking this step might mean that you will end up sacrificing some of your estate, but it is a far safer option than taking a risk with a loan or any other form of credit. It is also of the highest importance that you choose an independent financial advisor and stick with them. Maintaining the services of the same advisor will help you build a relationship with them which will certainly bode in your favour over the years.