Retirement is a big deal, and we are either actively preparing for it or not thinking about it at all. This post will present simple and creative ways to boost your retirement pot.
The average retirement age in the UK is just under 65, though this varies by gender and region.
It is important to note that, unlike in some other countries, there is no mandatory retirement age in the United Kingdom, but you can’t work forever, can you?
For most people their retirement plans start and end with their pension which isn’t bad in itself, but it’s a good idea to consider other creative ways to either boost your retirement pot thereby shortening your retirement date and reaching your retirement goals faster.
There are two types of pension in the UK: workplace pensions and state pensions. Workplace pensions are typically available to those over the age of 55.
Meanwhile, the state pension benefits have an eligibility age that you must reach before you can receive them. This is currently 66, but it is rising to 68 for those born after April 6, 1978.
The new State Pension is based on your National Insurance record when you reach the State Pension age
However, due to an ageing population and increasing life expectancy due to advances in medicine, the state pension age is likely to rise further in the future meaning the working life of many will automatically increase if you do nothing different or you choose to retire without much money in your pot
How can we prepare for retirement to beat the odds? I understand that everyone’s situation is different but in this list, there is something for everyone. Now is a good time to consider some of these creative ways to prepare for retirement
Your savings rate or percentage, specifically your retirement investment rate, is one personal finance number you should keep track of. This figure indicates how much of your income is being set aside today to prepare for tomorrow.
For example, if you earn £30,000 and invest £3,000 per year either through your personal pension, workplace pension contributions or tax-advantaged accounts like Independent savings accounts (ISA), your savings rate is 10%; however, adding £20 to your monthly direct debit of £250 increases your savings rate without you even noticing it.
Every UK resident can save or invest a mixture of cash and stocks up to £20,000 in your ISA each tax year which runs from April to march tax free including capital gains. There are different types of ISA
Royalties can be paid for items such as photographs, artwork, books, or inventions. The plan is to create something, trademark it, and then continue selling it.
There are many successful entrepreneurs who have built their businesses by creating one product and then selling it repeatedly. J.K Rowlings, for example, is the author of the Harry Potter series.
Your product does not even have to be a physical item; it could be an e-book, a video series, or a membership site where people pay monthly fees to access your information.
Just make sure it’s of high quality so that people will continue to pay for it for a long time even into retirement and boom you have a retirement income in addition to boosting your pot before retirement
If you have a company pension plan, it cannot be stressed enough that you should take full advantage of this contribution scheme; after all, it was designed to help you prepare for retirement with free money in play
There are a few things you can do to make the most of pension schemes
The debate and decision to relocate to a more affordable location is very popular among digital nomads and many professionals, particularly with the rise of remote working since the pandemic, but it is also very applicable to retirement.
Living in expensive cities such as London can make you feel like you can’t retire early, which causes many people to work longer than they intend because they are afraid of running out of money in retirement.
I believe it is worthwhile to look into other locations that may be more beautiful, have a higher quality of life, and be less expensive, but you must be flexible and open-minded to consider these other options. This will also greatly improve your mental health today and reduce the financial anxiety that many people feel today about retirement and their jobs.
Popular destinations include Portugal, Costa Rica, Georgia, Thailand, and smaller towns throughout Europe.
Bad debt, such as credit cards, payday loans, and other high-interest loans, can be very expensive; if you have to pay 20% or more in interest, paying off these types of loans is equivalent to receiving a 20% return on your investment.
If you have any of these types of loans, you should pay them off as soon as possible; this is an easy way to boost your retirement savings because you automatically get to have extra money even if it’s a small amount that can be directed to your retirement savings
How to pay off debt fast even on a low income
What are your first thoughts when you receive a lump sum, whether expected or unexpected? Do you feel compelled to spend or invest?
When you get a windfall, a good rule of thumb is to spend 10 to 20 per cent on yourself and invest the rest or pay off bad debt. What are your thoughts?
I’m not saying don’t celebrate or splurge, but its a good option to have a mindset of lump sum additional contributions to your retirement pot and your future self will thank you.
Another rule of thumb is to invest half of your raise and spend the remaining half, applying this strategy to always add to your investment makes a big difference and will drastically boost your retirement pot in 15years without you feeling the pinch at all.
You are basically thinking long term and allowing compound interest to work in your favour
If you are a higher-rate taxpayer and have maxed your tax free allowance, it is worth speaking to a financial planner to invest in a tax-efficient way
Starting a business or doing a side hustle can be a great way to supplement your income, and it is even more powerful if that extra income is invested in your retirement account.
If you have any skills or hobbies, you can turn them into a business, and the best time to do so is now. You don’t need millions of dollars in startup capital to get started; your biggest investment will be your time and creativity.
Another advantage to starting a side business applies if you can automate the business thereby allowing the business to run without your direct input and providing retirement income
There are almost always ways to make extra money. A side-hustle, whether it’s freelance writing or selling your crafts on Etsy, could be a great way to increase the amount of money you have on hand to put toward retirement.
Real estate is a very traditional way of investing and boosting your retirement pot but you can be creative even with real estate for example renting a spare room other creative ways of investing in real estate is through
If you’re like most people, you’ve amassed a collection of items over the years. Maybe it’s things you use and enjoy. Maybe it’s just things taking up space in your house. In any case, if you’re looking for simple ways to supplement your retirement fund, selling your clutter can be a great option.
Sell them on eBay or Facebook Marketplace for a quick cash infusion.
