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This is always a difficult question to answer. So many people have already reached retirement and then start to ask, “How can I boost my retirement income”? The problem is that you have reached your retirement, but the money you have saved is just not going to be enough. But there are solutions out there. Here are some strategies to help you boost the impact of the money you have saved in retirement, and still create your Dream Retirement™.
If you have a house where the mortgage is paid off, an easy way to boost your retirement income is to move to a smaller or a cheaper house. Releasing this equity, and accepting a less dramatic abode, can provide you with valuable funds that you can use to generate an income. You also have the option of equity release here, however financially downsizing is likely to be a more astute choice if that is practical.
2. Take More Now and Accept Less Later
With the new ‘Pension Freedom’ flexibility being available, you can take the gamble of spending the amount you need now, accepting that your income may be diminished when you are older. For example, if you have a Personal Pension of £50,000 and a State Pension of £8000 per annum, traditionally that would have meant you would have to settle for an income of about £10,000 per annum. Now you might say I want an income of £15,000, so I need £7,000 from my Personal Pension. If you draw an income out at this rate your pension will probably run out in about year 10. This isn’t ideal, but if you are happy knowing that an income of £15,000 until 75 is sufficient and that from 75 on you are going to be able to live off £8,000, then at least you are making an informed decision.
3. Move Somewhere Cheaper
Often overlooked, but moving to a part of the country or world that has a lower cost of living gives you a bigger bang for your buck. Whether that’s a move from Surrey to Slough, Stratford to Spain or Sandbanks to South Africa, only you can decide, but getting much more for your money is a good way to boost your retirement lifestyle.
4. Defer Your Retirement
By deferring your retirement you can allow your funds to grow more, with the added benefit of needing to draw them for less time. This doubles the impact of deferring your retirement. You can even achieve the same with your State Pension. Deferring your State Pension currently allows you to take a higher income or a lump sum when you do then draw it. The lump sum option is however being withdrawn in 2016.
5. Phase Your Retirement
For me, if I ever found myself asking “How can I boost my retirement income”, the most obvious answer would be to phase my retirement. Rather than retiring overnight, why not gradually ease yourself into retirement? Go down to 3 days a week and enjoy the benefit of not taking your pension as early, and the growth that comes with it. This doesn’t have to be you current job; why not start working in a role you have a passion for, even if it doesn’t pay you quite as much as your current one does. Who knows, maybe this will become your new purpose, and you won’t ever want to stop?
This isn’t meant to be an exhaustive list, but some food for thought. Try to think creatively if you ever find yourself asking “How can I boost my retirement income?”
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