Planning for retirement is a significant, long-term financial commitment. However, at My Pension Expert, we understand that you can’t hit pause on life while you save for the future.
Summer holidays, weddings, new cars, education – in the decades preceding retirement, there will inevitability be many other important, shorter-term goals that also require careful financial planning and saving.
Undoubtedly, striking a balance between saving for retirement and shorter-term goals, all while managing day-to-day expenses, can seem daunting. But by taking a strategic approach to financial planning, it’s more than achievable.
Here are our tips on how to effectively plan for your short-term goals while preparing for a secure retirement.
Take stock of your financial situation
The first step in managing short-term goals alongside retirement planning is gaining a clear understanding of your current financial situation.
This involves tracking your monthly income, expenses and debts to spot spending patterns and potential areas for cutbacks, identifying opportunities to increase savings contributions across both shorter and longer-term goals.
Taking stock of existing savings and investments is equally important. Knowing what you have can help you allocate funds more effectively between short-term needs and long-term goals.
Work out your priorities
Not all financial goals are created equal: some require immediate attention, while others can be addressed over time.
So, categorising your goals into short-term, medium-term, and long-term can help create a clearer idea of where savings should be allocated.
But this doesn’t mean planning for retirement should put on the backburner. While it might be tempting to pause pension contributions in favour of shorter-term goals, ensuring contributions remain consistent is a vital part of saving enough to build a solid, secure retirement.
Use financial products to your advantage
When balancing savings goals, selecting the right financial products can make all the difference. Different types of accounts offer varying benefits depending on the timelines of your objectives.
For short-term goals, one good option to consider is high-interest savings accounts. These types of accounts can help you to maximise returns while keeping your money accessible.
Meanwhile, for medium to long-term goals, exploring investment accounts that can offer higher returns over time compared to traditional savings accounts. However, it is important to recognise that such investment accounts come with a higher risk of loss.
Taking full advantage of matched employer contributions to your workplace pension can also help your savings go further, as this is essentially free money for your retirement.
Talk to an expert
Balancing short-term financial goals with retirement planning can undoubtedly be complex. Certainly, understanding which financial products will help you succeed at both can be confusing.
So, don’t hesitate to seek professional advice. An independent financial advisor (IFA), like those in the My Pension Expert team, can help you create a tailored plan that addresses your unique situation, ensuring that both your shorter-term goals and long-term aspirations are met.
That way, you can make the most of your money today while remaining confident that you’re on track for a comfortable retirement tomorrow.