20 Years to Retirement
7 practical steps to get you on track
Whoever, or whatever it was that has caused you to click onto this page and start thinking about the future, it needs congratulating.
Because, if you've got more than 20 years left until the big day, you are in a really good position. You may no longer be 21, (well, maybe you are, the above doesn't actually exclude it) but you are in a decent position to have an impact on what happens next. To take control of your money, build security - and help ensure you get to enjoy every minute of the free time the future - your retirement - will bring.
Want to get moving? Here's your checklist. Seven things that, if you haven't already organised, it is now time to get done.
Ready? Then let's get started.
✓ Enrol (if you haven’t already)
Most employed people are now, enrolled in a workplace pension scheme. And it is right to be - not only will you be forced to save before you even see the money in your pay packet, your contributions will also be topped up by your employer.
If, for any reason, you felt you should opt out, now is the time to rethink.
Of course, not everyone is employed. Some of us (me included) work for ourselves. But that doesn't mean we should be let off the hook. You are employer and employee - so open up yourself a personal pension and at least try to mimic what you would get as an employee.
Beginning with 4% of your gross income - and increasing to 8% as soon as you can.
✓ Check your budget
Ooh, the tedious prospect of looking through bank statements. But this is crucial to your financial fitness. Not only will this highlight where you might be wasting money, it will also show you where those elusive fivers seem to go.
Unconscious spending can seriously impact our wealth. As can overpaying for things like insurance, mobile phone use and ever-renewing, never-actually-used gym memberships.
(Yes, I have done that too!)
Time to take the bull by those horns?? We’ve even set up a budget template to help you capture everything - which you can download here >
✓ Organise your investments
You may have a while to go until retirement but you still need to make sure you are invested in a way that reflects the opportunity that provides.
With time on your side - your attitude to risk allowing - you may have scope to pursue growth a little more adventurously than will be the case as retirement gets nearer.
Age targeted or lifestyle funds offer a decent solution if you don’t have time to keep an eye on investments yourself. They come in all shapes and sizes, for all different risk levels.
And if you get one that's grounded in passive investment funds, that will also keep your fees nice and low. After all, it's your money. You need to make sure it is working for your retirement and not feeding someone else's.
✓ Cut your debts
Another way that many of us inadvertently feed the retirement of strangers is through credit cards. I've paid down more than my fair share of balances on these - and I have to say, I really regret it...
The interest we pay on short-term borrowing is higher than any growth we could ever achieve from an investment. So if you have let yourself run up debts, now is a really good time to get them sorted out.
Perhaps you could start by using the spare cash you just found in your budget plan.
✓ Consolidate your emergency fund
You've found some spare money, you've paid off your debts. Time to organise that emergency fund. To cover yourself for...well...emergencies.
I would recommend you keep going until you have the equivalent of at least 3 months salary – or, if you have children, perhaps nearer 6. That should give you both some freedom to take a few risks in other areas (and not just investment!), by providing a cushion if an unexpected expense crops up. Stop you having to dip into longer term savings. Or worse, borrow (again).
And it's not only for emergencies, either. We've got some even more interesting reasons for you to save - and you can read about those here…
✓ Get a retirement forecast
getting yourself a retirement forecast can be an educational - and perhaps sobering experience. It means finding out what your existing savings mean for your future. Discovering if there are any additional savings you can make - and seeing what type of future you can currently expect.
Then you take a look at what you want to do in the future - and work out whether there is a gap. And the earlier you realise there is a gap, the easier it is to fix.
Use an online calculator, or sign up to test out our assessment tools, to find out what your future looks like. And then perhaps consider undertaking our 'Your purpose' exercise to see if the two match up.
✓ Start your journey in earnest
With time on your side, you have the best chance to achieve financial freedom and build a future you can really look forward to.
In fact, why not make the exercise more formal. Try our 5 Day Money Make-Over. And kick start that whole process. Right now.
It's free. Yet, could transform the way you look at your money in less than a week.
Auto Enrolment advice is not regulated by the Financial Conduct Authority.
A pension is a long term investment. The fund value may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation.