The big, blank eye of bureaucracy stares back at me every time I think about that ‘golden’ retirement. How on earth am I going to achieve a secure retirement on a British pension? Even with a private one, I’m thousands down on what I should have tucked away already.
I had a look at what Standard Life calculated my real retirement age to be in the United Kingdom as a person with no retirement savings and the reality is I’ll be looking at retiring no earlier than 74 at this rate!
Basically, following the Government’s decision to increase state pension age as high as 68, people without retirement savings who are hoping to rely on state benefits will find their income falls as low as 21 of their earnings on retirement.
They base their findings on a man currently aged 27 and earning £25 800 per annum. His state pension age will be 68. He will retire on 34 of his pre retirement income of £170 per week.
This outlines the stark reality. I need to find a retirement income that equates to two thirds of my current earnings and at present, I earn quite a bit. But that’s not all. I want to retire early so I can enjoy those ‘golden years’.
With this in mind I’ve been trawling the net and asking financial advisors what the answer is.
Most say that increased savings are the only answer but how many of us can actually stash away a third of our monthly earnings? In today’s climate there’s very little left after the bills have been paid so what is the solution?
Firstly you need a retirement fund of some sort, whether it’s a private or corporate pension. Then there are property investment options to consider.
Do you stay in the family home?
Do you sell up and down size?
Do you sell up and rent, investing the money in commodities?
Do you buy to let and live off the residual income?
If you plan to stay in the family home after retirement you need to think about the practicalities of maintaining it, the running costs and most importantly how it ties you down.
What made sense to me was being able to release the equity in a home and use it to invest elsewhere but perhaps that’s too easy. I may just spend it all and end up owing more in the long run.
I did discover that you can release 25 of your pension fund as tax free cash from your British pension if you are aged 55 – 62. That made more sense. The one thing that has stayed with me through all this research is the idea of selling my family home for market value and renting a long term retirement home even though it goes against the grain to rent after a lifetime of paying off a mortgage.
I had a closer look at Girlings Retirement Rentals and the idea really did appeal. What appealed more is that I could also buy in to more than one unit if I chose to which would make me a landlord with equity in a good property investment – after all, the UK is dominated by the Grey market.
The other retirement property group that caught my eye was Archstone Retirement Living. Their locations are well chosen and made me think of holidays away, except this time, permanent ones!
It seems that although warnings at present are all about avoiding buying property, there can never be a right time to buy into investment retirement property.
I’m 45 and seriously thinking about buying a unit now to enjoy when I’m older. In the meantime it can be rented out which means more money for me to invest elsewhere or, perhaps in another retirement unit to supplement my retirement income.
Pension schemes really don’t seem worth the investment anymore and I, for one, will still keep my money in bricks and mortar. The population is growing older and to me, retirement property portfolios can only become more lucrative.
James Davis of UPad has this to say about using buy to let as part of your retirement plan: “The current economic climate has meant that now, more than ever, many of us have had to diversify our investments. And, the last two years have provided clear evidence that a policy of investing in stocks and shares along is not sufficient – particularly those looking for an additional retirement fund.
The rental sector provides many opportunities; buy to let investors have the potential to benefit from a regular income, as well as capital appreciation.
Student lets are expected to double by 2020, so this could be a good market to look at, as well as single dwellings. The rental market is picking up, and where house prices have experienced a real dip, now could be the time for tos who are retired – and potentially cash rich – to diversify their investments and look at building up a buy to let portfolio. They just need to remember to approach this as they would a business.”
I plan to be carefree and earning during my retirement. What about you?
Author Resource:-
Jane van Velsen is a business blogger and writer of ezines, newsletters, blogs, social media applications, strategies and marketing literature. CLients include legal, property, finance, tourism, women's interest, marketing and food. http://www.therightwriter.co.ukhostgator coupon
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