How to Build a Nest Egg Close to Retirement Age

Retiring is a major milestone in life, and one usually attributed to freedom: freedom to enjoy the finer things, to spend time with family, and to indulge in the activities you find personally nourishing. In recent years, though, retirement has become more attributed with stress. As rising inflation threatens the affordability of most working households, and as the triple-lock is tested to its limits, retirement is increasingly becoming something that many of us can’t afford.

If you’re on your way to retirement age, you might naturally be feeling some concern about the state of the nation’s finances – and about your own finances within that same landscape. As such, you might be looking at how best to boost your retirement nest-egg. What follow are some essential routes to reinforcing your retirement money before you finish work.

Budget

Firstly, if you haven’t already, you should set out your post-retirement budget. You should be able to account for your post-work living costs, giving you a ballpark monthly outgoing to measure your savings and pension against. If you have paid off your mortgage fully, all the better; this reduces your living costs, and enables your money to stretch further.

You should expect to be supporting yourself with retirement income and savings for at least 20 years, if not 30. With this in mind, some basic calculations can give you an idea of how much wiggle room you might have – or how thin you may need to stretch your finances to meet the bare minimum.

Your Pension

The main driving force of your retirement finances is, of course, your pension. Pension plans are particularly powerful for the tax benefits they offer you, where 25% of your total pension pot is free from income tax. The sooner you pay into the scheme, and the more you pay in, the larger your pot and the more you can save from taxation. Consider maximising payments if you haven’t already.

Equity Release

Outside of your general living costs, there are considerable costs to consider in the form of lump payments. These might take the form of emergency costs, quality-of-life upgrades to your home, or simply bookings for those long-awaited holidays. These costs can be inhibitive, but they needn’t be sourced from your savings; rather, you could use equity release to access value trapped in your home, letting you front costs in exchange for repayment on the sale of your home.

ISAs

As for building up an additional font of savings before you retire, there are few better products to do so with than ISAs. ISAs enable you to save with high rates of interest, and also protect the interest you do earn from taxation. If you are young enough, and aiming to retire early, you could even use a LISA to maximise your returns up to £4000 year on year.