However you choose to define it, it’s knowing you don’t have to work to live, but to add life to your retirement years if you so wish. It’s knowing your mortgage is cleared all your essentials are covered, and your luxuries are all budgeted for with a rainy-day fund in case the roof falls in. It’s a good feeling. One you want to savour. At free2, we’ve been doing some serious thinking about how people can plan their future financial security, and we discuss how you may be closer to Retirement Freedom than you may think, here.
We recently wrote about Freedom Day, what that could mean for you finances and we spoke about Financial Freedom and how that can be planned for. One of the key considerations for many people wishing to achieve financial freedom, as they transition into retirement, is the desire to live mortgage free. So, what do you need to consider?
Paying off your largest debt
What does it mean to you? One way of defining it, is easy. It’s the feeling of knowing that you *don’t* have to get up in the morning, you *don’t* have to get onto that commuter train, or join the motorway queue – because you’ve repaid your mortgage and have enough income for all the essentials, and the day is free before you and yours to enjoy. And if work happens to be part of the day ahead, then it’s a choice you’ve actively made.
It’s a truly liberating feeling.
Part of that feeling of liberation, of freedom, is knowing it’s a well-earned reward. Because, for most of us, it’s something that must be actively planned for, through working, saving, investing, and maybe even downsizing.
To arrive at that stage of liberation, you need to put together a financial plan, which calculates the income you can create from your pension plans, any other savings and investments, or assets such as property or a business interest, and compares against your outgoings and any need to service other debts. (Not forgetting putting aside some rainy-day money in case of a broken boiler, leaky roof, or a global pandemic.)
How to make that plan?
You could start planning for financial freedom in retirement by asking yourself, what do you *really* want to do in retirement? This may involve challenging your own assumptions, and deciding that, say, dining in Michelin Star restaurants every week isn’t a “must do”, but that you’d rather be doing an advanced cookery course. To give but one example.
Something else to determine is to what you’re going to do with your free time and giving thought to structuring your day. The first few years of retirement are easy, as you complete various projects you’ve been too busy to do while working, but after that? What will you do? Do you want to be fully retired? Semi-retired with some part time working?
Can you picture your goals, how you’ll spend your time, and inform yourself of your likely retirement income? Covering issues such as budgeting and expenditure and rainy-day savings, alongside your sources of income, such as: a company pension, state pension, personal pension, sale of assets, or realising investments.
Thinking about these kinds of issues, and working towards financial freedom in retirement, is arguably best done with assistance from a professional financial adviser. This is where we can assist.
The Funding Comparison Tool is not intended to provide personal financial advice and any action taken will be your own responsibility. If in doubt, please seek advice from a professional Financial Adviser.
Free2 Limited (trading as free2) is an Appointed Representative of RS Consumer Finance Limited (RSCF) which is authorised and regulated by the Financial Conduct Authority (the FCA). free2 is a credit broker, not a lender, and will only offer loans from RSCF – an offer of credit is subject to status and affordability. Terms & Conditions apply. www.free2.com