Scottish Investment Trust : Aim high – for freedom and choice in retirement

One of the many odd things about 2020 was the amount of time we spent at home. The daily routine of rising, commuting to work and interacting with colleagues came to an abrupt halt. With a few exceptions, our new routine has been defined by the parameters of home. That presents obvious challenges - even the most committed homebody would chafe under months of confinement. But it has also given us a glimpse of what it'd be like to spend zero time in the workplace - in a sense, what retirement may look like. And that insight, although hard earned, is invaluable.

Have your goals changed?

The experience of the pandemic has changed the longer-term goals of some. A report by PwC finds that 'Covid-19 has fundamentally changed the way we view cities', as people place greater value on homes with outdoor spaces in smaller towns over city living. The pandemic has also reminded us of the importance of family and friends. That too could prompt a move, as we rediscover the value of having loved ones close by. For those of us still working, the glimpse into post-retirement life has come at a time when we still have the power to save and plan.

It's your future. Take charge!

For some people, saving and planning is a chore, but in reality, it's an ultimate act of self-care. Picture the life you want in retirement - the home you see in your mind's eye, the places you want to visit, the new experiences that await.

Make it aspirational, then work backwards to find out what sort of annual income you'd need to make that life a reality. Retirement planning shouldn't be a bore. Done right, it gives both freedom and choice. There are lots of free online tools to help you get started. For example, the calculator from Age UK lets you input a desired retirement age and target retirement income. If there's a shortfall forecast from your current retirement plan, you can change it accordingly.

Live long and prosper

According to the Office for National Statistics, people are living longer and therefore spending longer in retirement. This is clearly a 'good news story', but when you plan your retirement finances it makes sense to factor in Spock's greeting.

What else can I do?

As we've mentioned before, the golden rule to retirement planning is saving early in life. As soon as you're in permanent employment, get to know the details of your employer's pension scheme. Defined contribution schemes are the most common, requiring contributions from both the employer and employee. Get your pension fund off to a flying start by contributing as much as you can afford. You could also consider the following points:

• When reviewing the portfolio of your employer's pension scheme, are you comfortable with the investments made on your behalf and the level of risk involved? If not, you may want to make changes or arrange to speak to a financial adviser.
• The government encourages additional savings for retirement by offering supplementary tax-efficient options, such as Self-Invested Personal Pension (SIPP), Lifetime Individual Savings Account (LISA) or Individual Savings Account (ISA), allowing your money to grow over the long-term.

Remember, retirement is all about your future. Be proactive! And if you find that you're not saving enough, don't lose heart. Speak to a financial adviser about the best course of action.

Please remember that past performance may not be repeated and is not a guide for future performance. The value of shares and the income from them can go down as well as up as a result of market and currency fluctuations. You may not get back the amount you invest.

The Scottish Investment Trust PLC has a long-term policy of borrowing money to invest in equities in the expectation that this will improve returns for shareholders. However, should markets fall these borrowings would magnify any losses on these investments.