Pensions advice: Have you a plan for your second life?
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If your health is good, this is the most impactful area and is often the one in which the least attention is paid. What will you actually do every day? Yes, you might travel. But this will likely be for one or a few months of the year, and maybe just for a couple of years. Yes, you might play golf, but hardly every day. And as someone recently asked a friend of mine who said he’ll play golf every day — what will you do with the rest of the day?
The bottom line here is that between working, commuting, and socialising around work, this likely took up maybe ten hours per day. That’s a lot of time to fill now… It’s wise to start thinking carefully about how you might fill your days. It’s quite daunting but very exciting having all this time available to you. Plan to make the best of it.
As we all know, so much of the quality of our retirement hinges on having good health. While some people are just plain unlucky in this regard and are afflicted by poor health through no negligence of their own, most of us can have a positive impact on our health in our later years. Having a plan in this regard and the commitment to see it through will likely have an incredible impact on your quality of life.
It starts with planning to fuel the body well. Eating and drinking healthily will improve your health, increase your energy levels and have you looking and feeling better about yourself. You’re not rushing out the door anymore, grabbing whatever is handiest to eat. Committing to making that bit of extra effort to prepare healthy food will have a big impact. Who knows, maybe you’ve run out of road now in terms of excuses of not having the time to do that cookery course! There’s possibly a gourmet chef hidden inside you — now you’ve the time to find out.
And of course, there is exercise. Build positive habits, doing things you enjoy. Whether that’s walking, playing golf, sailing or going to the gym, build exercise into your routines. You’ll feel better, will have more energy and vitality and will maintain your physical abilities for longer. Also, there are endless articles from reputable online publications that explain how strength and resistance training helps to prevent the onset of dementia in older people.
Exercise is key, so have a clear plan of what you will do and when you will do it.
This is not morbid — instead identifying the stamp you’re going to leave on the world, your community or your family around you and how you will share the fruits of your success is exciting and a really uplifting subject. What will you do and how will you do it?
For some people, it will be through their generosity of actions — this might be through charitable work, voluntary time given to a community or sporting organisation, or simply through helping others. For other people, it might be through their financial generosity. Either way, they all leave positive memories behind them.
Again though, this requires planning. Without a plan, time will just slip away and good intentions will never happen. You also run the risk of financial mistakes happening, and tax-efficient opportunities being missed, reducing your funds available.
Financing the life you want won’t happen by magic. It takes a plan and then commitment over many years. Thankfully this task is made a bit easier by the tax efficiency of pension funding that we mentioned at the top of this piece. These are of course a significant incentive for pension funding. The main benefits (within certain limits) are;
- Full tax relief available at your marginal rate on contributions.
- Your fund grows free of tax (no DIRT, CGT etc).
- A portion of your fund can be taken tax free at retirement.
- A structure can be put in place at retirement (Approved Retirement Fund — ARF), which enables a tax-efficient wealth transfer to your estate on death with any remaining fund.