Retirement planning for single people is essential for helping secure a comfortable and enjoyable old age.
Without a partner to rely on, you will need to think carefully about your finances and how you will make your pension generate sufficient income. You must also consider how you will spend your time long after you have given up work.
Here CashLady looks at retirement planning for single people, with three handy tips including taking stock of your pension, paying off debts before your final salary payment, and developing new interests and hobbies.
Retirement planning for single people
The average man now retires aged 65.1, while women retire at 63.6, according to figures from the Department for Work & Pensions.
It pays to start your pension planning sooner rather than later, particularly if you are getting older and anticipate going it alone.
Taking stock of your pension
With several pension types potentially available to you, along with pension entitlements from different companies that you may have worked for over the years, it’s hard to know where to begin.
Start with your state pension
Your state pension is provided by the Government and based on your national insurance record.
To get the full pension, currently around £155 a week, which works out at just over £8,000 a year, you will need 35 years of NI payments, which can be topped up if you missed any.
You can check your state pension forecast here to learn when you will get it, how much it will be and how you can increase it (if possible.)
Finding any lost workplace pension entitlements
Your defined contribution pension a workplace pension, or a private pension arranged by you and is based on contributions paid in by you and your employer.
While a ‘final salary’ or ‘career average’ pension scheme, doesn’t depend on investments and is typically based on your salary and how long you’ve worked for your employer.
To ensure that you don’t miss any pension entitlements that you may have gathered over the years, use the Government’s free Pension Tracing Service, and then email or write to anywhere you suspect pension entitlements may have been missed.
Getting advice on your pension
Once you know what you have in your pension pot, forecast whether this will generate enough income in retirement and then if possible look at boosting your contributions.
There’s no need to figure your pension planning out alone and you can pay for advice from a financial adviser or access free pensions guidance through the government initiative, Pension Wise.
Paying off your debts before retirement
With your retirement finances resting on you alone, it’s important that you try to clear any debt before giving up your career and foregoing your regular salary payments.
Figures from Prudential show that the proportion of people who expect to retire in debt this year is at its highest level for seven years and that the level had risen to 44% in London.
The Prudential’s findings showed that retiring with outstanding debts is a growing problem, with 25% of those retiring in 2017 doing so in debt, which is up from 20% last year.
It’s important to try and clear any debt because you will most likely experience a drop-in income when you enter retirement.
Using your pension or savings to make debt repayments may be stressful and could eat into the income you planned to use for other financial commitments.
Dealing with debt
Calculating the amounts that you owe and where and then making a budget will help you identify how much you can pay towards each creditor, forecasting when the debt will be cleared.
Retirement planning for single people: an enjoyable retirement
As a single person without a partner or spouse, it’s important to lead a sociable and fulfilling life outside of work if you can.
After you retire you will then be free to holiday with friends, join clubs and pursue your hobbies and interests more deeply.
Taking time to imagine how you will spend your retirement, whether it’s learning new skills, enjoying exotic travel, or playing golf, will help you decide where you will want to live and the type of life that you want.
With good financial planning behind you and no need to clock into the office anymore, retirement could be some of the best years of your life.