For many people, the thought of retirement is what keeps them motivated to go to work every day and earn their salary.
For those who are lucky enough, it can mean long holidays spent in sunnier climes, exploring the world and making the most of their later years. For others, it simply means a greater degree of freedom and a chance to spend more quality time with their loved ones.
Recent research found that more than 3.5 million people aged over 65 in the UK retired earlier than expected. However, only 26% of those said they did so thanks to having enough salted away in pensions or savings. In contrast, 25% were forced to retire due to illness, with redundancy accounting for another 21%.
There’s no doubt that the main consideration for those seeking to retire is the financial impact. As the data suggests, many are not fortunate enough to live off their savings, so what are the different ways you can fund retirement?
- You can claim your state pension from the age of 66, set to rise to 67 between 2026 and 2028. The amount you currently can claim is £179.60 a week, although that could change depending on your National Insurance record.
- Your workplace pension is built up throughout your working life. A percentage of your salary is invested through the scheme every month and in most cases your employer will make an additional contribution as part of the deal.
- A lifetime annuity can be purchased using your pension pot and will offer a guaranteed income for the rest of your life.
- While you’re still working and earning a salary, this money can be put towards funding your retirement. However, the income you receive through this means will vary widely depending on the nature of your work, and may not be enough to support you once you stop.
- You could also invest some of your money, for example in stocks and shares. However, there are no guarantees of making a profit and you could end up losing any funds that you do commit via this method.
- You could free up some funds through your property – whether that be by downsizing to a smaller place or releasing equity to unlock some of the value you have tied up in your home.
- If you have made investments that have performed well, you could look to use these to supplement your income.
- As long as their sentimental worth doesn’t outweigh the potential financial gains, any valuable possessions such as classic cars, antiques or collectible items could also be sold to help top up your retirement income.