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Why Now is a Good Time to Double Down on Your Retirement Plans

Over the last couple of years, millions of people have seen their financial circumstances deteriorate. First it was the pandemic. Now it’s the cost of living crisis. 

Inflation is at levels not seen in four decades, incomes are nowhere near keeping pace. In real terms, people are getting poorer.

At times like this, people’s financial optimism takes a severe hit. They look to the future and see only reduced means, tightened purse strings and a lower quality of life.

These sorts of attitudes are reflected in how economic uncertainty affects people’s thinking about retirement. According to one study on the impact of the pandemic, two out of five people aged over 50 and not already retired say COVID-19 has affected their career and retirement plans.  2.6 million over 50s now say they will keep working indefinitely, with another 1.45 million planning to delay retirement by more than three years.

According to the IFS, 8% of adults in paid work now expect to retire later and have reduced means to do so as a result of the pandemic. This rises to 57% of adults who reported doing less well financially before the pandemic.

It’s certainly not hard to understand why people might show negative attitudes towards their future financial prospects at times like this. But if anything, difficult times make it all the more important to stick to your plans and hold a steady course.

This is certainly true of retirement planning. Getting ready for retirement is never a short-term fix. It takes a long-term strategy and a certain amount of discipline to get yourself in a position where you have the means to retire. 

But the point of taking a disciplined long-term approach is that it should allow you to ride out short-term setbacks. Rather than thinking in terms of delaying retirement, the principles of sound financial planning advice say now is the time to double down on your plans. 

If you are concerned about the way changes to your income might impact your retirement funds, then that’s a sign you need to revisit and bolster your strategy, not abandon it.

Here are some practical steps to take to keep your retirement plans on track however the current economic climate is affecting you.

Act early

From a financial planning perspective, the best time to act on achieving your goals is now. The more time you give yourself, the more chance you have of being successful. 

As far as planning for retirement is concerned, it’s never too soon to get started, even if you are in your 20s and have just started out in work. But no matter how far down the road you are in your career, there’s still time to make a positive difference – if you are swift about it.

If you are just a few years off your planned retirement age and are worried that recent changes in your financial circumstances might affect your ambitions, don’t sit on your concerns. Act on them and make the changes that will keep your dreams on track.

Revise your budget

One of the cornerstones of long-term financial planning is being able to put aside enough money from your earnings to fund your future goals. If your income has taken a hit because of the pandemic or you are seeing your living costs rise sharply due to current inflation, your first step should be to see if you can protect the level of investment you are making to your retirement fund.

Professional financial planners will always recommend you budget your expenditure according to your income to leave what you need to invest in your long term plans. Even if your income dips or your costs rise, you may be able to continue putting the same amount aside for retirement by cutting costs elsewhere. This becomes more important the closer you get to your planned retirement, as there will be less opportunity to see your financial situation improve again to smooth out the current dip.

For the sake of realising your retirement dreams on schedule, most people would agree that cutting a few luxuries here and there in the short term is better than prolonging your working life indefinitely.

Talk to your financial planning advisor

Ultimately, the person best placed to recommend how to keep your retirement plans on track is your financial planning advisor. They can help you with things like cutting down on expenditure and adjusting your budget. But most importantly, their role is advising you on how to invest the money you put aside to create the wealth you need for a comfortable retirement.

If you do need to trim down the amount of money you put into your retirement fund for a while, your financial planner is best placed to recommend how that will impact on your returns, whether to change investment strategy etc. Again, the sooner you speak to your financial planner, the more time there is for an adjusted strategy to bear fruit.

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