Retirement – Things to Consider

Are you approaching retirement? For those who are, it can be apparent that a challenging transition is ahead. Not only will your day to day way of life change, but your financial circumstances will also see massive alterations. Financial aspects of retirement are those that require the most forward planning to help alleviate unnecessary stresses and strains on you and your family. But what exactly should you consider when thinking ahead?

Well, the first thing you should consider is the type of income you will have. For many people this means deciding how to turn their own pension fund into an income. The two most common means of doing this are an annuity or income drawdown. Each, of course, has its own benefits and downsides.

Longevity and sustainability are two of the most important factors to think about when deciding upon your chosen income type. Over time your money will be worth less due to interest and inflation. Those who have a fixed lifetime annuity, will have the same income even if money devalues, meaning that their money is worth less as retirement goes on. Make sure your pension income is “future proof” to make the most of your pension fund that you have worked hard to save.

You should also consider how much flexibility you want to have over your income as well as how often you would like to receive an income – whether that’s monthly, quarterly, every six months or even just a larger sum once a year. All of these are important factors that could affect how you convert your pension into an income.

As well as deciding how to convert your fund into an income, you need to think about how your new retirement income will change your current lifestyle. Will your new income be drastically lower than whilst you were working? If so you could supplement it somehow or modify your lifestyle consequently. Sometimes it may be appropriate for retires to downscale their home to allow for a cutback in living expenses.

Find out more about AXA Annuities

Technorati Tags: advice, family, Finance, finances, planning, retirement