We're still looking at how to make things easy when you get to retirement. One thing that, to me at least, is vital for a retirement which minimises financial stress is to set things up so that you spend as little as time as possible engaging directly with your money.
I know that for some reading this, managing their finances is a hobby, a delight even, but that’s the exception, I reckon. Most people find managing finances a chore, and would benefit from a largely hands-off system the enables them to spend more time doing other things they truly enjoy. There are a few things you can do to make your financial management as easy as possible:
Keep things simple – don’t have too many accounts, of whatever type, without good reason. It’s quite OK to have one platform with one of each major account on there. I also do see the benefit in at least some platform diversification, so you could consider having our ISA on one platform and your pension on another.
I’ve mentioned before that I’ve seen people rate chasing by setting up an elaborate series of bank or building society accounts and moving money between them each month to secure the higher rate. I generally urge my clients against this because it introduces complexity for relatively little benefit.
Automate where possible – As much of your finances you can put on autopilot, the better. If you can set your income withdrawals from your portfolio to increase automatically by inflation each year, then do that. Pay things by direct debit; automate inter-account transfers stuff like that. Every automation is a bit less time spent managing things.
Schedule reviews – As much as you can automate, you will also need to keep an eye on things, so set this up in such a way that you know when you’re going to do it, and then don’t think about things in-between times.
Most of us work on a monthly financial cycle, with pensions paying in monthly or lunar-monthly in the case of the state pension, and bills going out at the same frequency. So choose a day of the month to check that all is well with everything, and then forget about it between reviews.
Knowing you have a scheduled time to review things relieves you from having to hold everything in your mind. Freeing up psychic energy from mentally maintaining things will work wonders for your mental health.
This is mostly about setting things up intentionally so that things largely look after themselves, and so that when you do need to review and intervene, it is easy to do so.
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