There are many different ways in which people now prepare for retired life and making sure you have something for when you reach retirement age is important for you to be able to keep up the lifestyle you desire. If you are used to a certain lifestyle if you don’t plan ahead then there may be things you have in your life now that you would have to cut down on dramatically living primarily off a Basic State Pension. Some of the different ways in which people prepare for their retirement are:
- Gaining an income from a property – There are many things you have to take into consideration before using a property that you own for renting out. The amount you get taxed on this income varies on how much you earn from the renting income. If the total amount you gain for renting your room/house is less than £4,250 then you will not have to pay any tax, however, if its more then you will be taxed accordingly or alternatively you can be taxed under the rules for residential lettings. Under the residential lettings rules you will be under either running a business if you only rent one property if you rent out more than one property all properties rented out will be classed as a single business. The tax in both instances is worked out by; adding together all your rental income, adding together all allowable expenses (replacing roof tiles, painting work, mending a broken window or door, replacing lead pipes with plastic ones etc.), then you simply deduct the amount of the expenses from the amount of rent income and that is the amount that will be taxed upon.
- Saving enough money – If you don’t want to join a pension plan then you can open a normal high interest account that you can put money into each month if you can afford to then don’t touch any of this money, and because you can afford to put a set amount in each month you will be able set up a direct debit from your current account to your savings account and you need not think about it till you retire. If you can’t afford to put a set chunk in each month you could set up a normal savings account in which you can put money in when ever you can afford to, with these accounts there is the benefit you can put in what ever amount you want, when ever you want with out any penalties.
- Pension schemes – There are of course the many different pension schemes available although finding the best one for your circumstances you may be best seeking financial advice. Each one has different benefits and it would depend on your income and how much you can put into it each month.
Deciding which route you would like to take in the way of saving for your retirement is an important decision and the earlier you decide the better in the long run. If you would like help in deciding you can speak to any financial advisor that would be able to explain thoroughly about each option.