Saving for retirement is not a consideration that is often at the forefront of many people’s minds. However, building a stable pot of money to pay for your home, essentials and amenities beyond the age that you are eligible to work is invaluable.
Inchmarlo Retirement Village offers a wide range of apartments and houses that aim to promote active and social living for retirees. As such, we understand just how important it is to prepare your finances for independent living as early as possible.
Why you should save for retirement
Saving for retirement, whilst not necessary for everybody, provides a level of security in your final years that cannot be understated. It is common for people to rely on their pension, but unfortunately, not everybody has access to a reliable pension depending on their line of work.
Creating your own pension fund in preparation for retirement will make all the difference.
Having a retirement fund in place will give you the stability you need to thrive when you are free from the responsibility of work.
Having a retirement fund in place can likewise give you the option to retire early, should you wish to do so, and pay for additional equipment like stairlifts, to make your life easier.
How much money do you need to retire?
The amount of money you need for retirement depends entirely on how you picture living. For example, if you plan to live minimally by relocating to a retirement village and surrounding yourself with your family, then you will need less than someone who wants to go on regular holidays abroad.
However, it is recommended that you plan to have: £15,000 – £45,000 per year.
You should consider the following factors, and budget them into your yearly fund:
- Yearly holidays
- Car expenses
- Pet expenses
- Gifts for loved ones
- Eating out
- Home improvements
- Social activities
Check your State Pension forecast now.
How to budget for retirement
When budgeting for retirement, you need to ask yourself the following questions:
1. Will my essential budget differ?
Typically, it is not common for people to stray from their typical spending on essentials as they transition into retirement. The budget you set aside monthly for groceries, toiletries and cleaning products should stay the same.
However, if you are planning to spend more on food due to an increase in family dinners or you wish to eat out more often now that you have the time, then you will need to consider this.
However, your average monthly and yearly costs can act as a useful indicator of your spending average in retirement.
2. Do I plan to move to a retirement village?
The decision to move to a retirement village upon retirement is one that should be made in advance, as it will impact how much money you will need.
You first need to ask yourself whether you plan to buy the property upfront, or take out a mortgage. If you pay upfront, then you will need to have an understanding of the type of property you wish to move to, as well as how much it will cost.
However, if you wish to take out a mortgage then you will need the cost of the deposit readily available, and include your monthly mortgage repayments into your yearly budget. This can be achieved by selling your existing home to cover the cost.
If you are still paying off the mortgage on your home, then you may even find that moving to a retirement village is more affordable for you.
3. Will my insurance premiums change?
Many insurance companies use age bands, which can impact your retirement budget.
Your premium will increase as you age, so it is important to check the policy of your insurance provider, and factor this into your budget.
4. Are there additional medical costs I need to consider?
Predicting medical costs into retirement is one of the more difficult considerations, but it is still important to consider it.
For example, you may need grab rails added to your bathroom, or a stairlift installed in your retirement home.
We recommend having an emergency fund kept to one side that can cover any necessary expenses, so they don’t eat away at your yearly budget.
5. Am I going to continue driving?
Whether you continue to drive beyond retirement is a choice you have every right to make. Many people still wish to keep their vehicles into retirement to retain independence, particularly if travelling or spending time with loved ones is a priority.
However, you may find that it suits your budget or lifestyle to sell your car. If this is the case, then it is always best to ensure that you have a close network of family and friends nearby who you can get to via public transport.
6. Will I spend more on hobbies and travel?
When you retire, you will find yourself with an abundance of time on your hands, potentially more than you even expected. It is common for retirees to find themselves twiddling their thumbs after spending decades of their life in continuous work.
If you wish to travel, whether by yourself, with a partner, or with your friends, then it is important that you set aside enough money for the holidays you’ve always dreamed of.
Of course, the type of holidays you want will also impact your budget, so you need to decide whether you want monthly trips to the Scottish coast, or yearly adventures on global cruise ships.
You will also need a budget for social activities and hobbies. Make sure you set aside a monthly pot of money for the things you love doing most whether that’s reading, dancing or enjoying a spot of golf.
How much is a retirement home?
At Inchmarlo Retirement Village, we have over 180 retirement homes in nine distinct neighbourhoods that range from around £70,000 for a 1 bedroom apartment to £350,000 for a 4 bedroom house. We have a wide range of retirement houses and apartments in Banchory, Aberdeenshire, including detached houses that come with private driveways, garages and gardens, and apartments with balconies.
Our aim is to promote active and independent living in a community where you can enjoy an active social life with like-minded people, regardless of the size of your retirement budget.
Take a look at our retirement homes for sale, or discover our care home if your needs are more suited to full-time care.