Looking to assess your financial health in your 40s or 50s? You’re not alone. With reports of plans for a “midlife MOT” by Rishi Sunak, many are looking for ways to review their finances and secure their future. Here are five practical things to check if you want to take your first steps in reviewing your wealth.
Review outstanding debt
As you approach retirement, it’s crucial to consider reducing your expenses to ensure financial stability. A great way to achieve this is by creating a plan to reduce outstanding debt. Your mortgage is likely to be one of the most significant debts you have, and owning your home outright can lead to a substantial reduction in necessary income. Paying off credit cards or loans can also increase your disposable income in the future, so it’s worth including them in your debt reduction plan. It’s essential to note that having debt, including a mortgage, shouldn’t deter you from retiring. However, it’s vital to factor in repayment as an expense when assessing the income you need. We’re here to support you through the process and help you achieve your retirement goals.
Check your investments
It’s essential to review your investment portfolio regularly to understand its performance. It’s advisable to take a long-term view of your returns rather than focusing on short-term fluctuations. This review is also an excellent opportunity to ensure that your portfolio aligns with your goals. Any changes in your circumstances or aspirations may require adjustments to your investments. If you’re not already investing, it’s worth considering it as a means of achieving your long-term goals. While investing does entail some risk, historically, markets have provided returns over more extended periods. Investing can help you grow your wealth and keep pace with inflation if you’re saving for a goal that is more than five years away. When investing, it’s crucial to assess the level of risk that’s appropriate for your situation.
Set out your retirement plans
When it comes to planning for your retirement, it’s easy to focus solely on finances and pensions. However, it’s essential to consider when and how you want to retire to create a dependable retirement plan. Could you take a moment to outline your retirement goals? Are you interested in gradually reducing your work hours? Or are you aiming for an early retirement? It’s also crucial to consider the lifestyle you envision once you’re no longer working. This will help you determine the required income from your pension and other assets to achieve your desired retirement lifestyle.
Review your pension
To ensure a comfortable retirement, it’s important to understand your retirement plans clearly. One aspect to consider is your pension and whether it will provide enough financial security to support your desired retirement lifestyle. Evaluating the value of your pension can be challenging, as it’s difficult to predict how it will change over time and what it needs to be worth to meet your needs. In addition to assessing your contribution rate, investment returns should also be considered. Seeking the guidance of a financial planner can prove invaluable in this process. Reviewing your pension now may reveal potential gaps, allowing you the opportunity to address them before retirement.
