You can work and claim Universal Credit at the same time. But if you’re on a budget, it’s a good idea to work out how much you can earn while on Universal Credit. Let’s take a closer look.

How do earnings affect my payments?

The way in which your Universal Credit payments will be affected will depend on whether or not you receive a work allowance.

When you don’t get a work allowance

Your payments will be reduced gradually depending on how much you earn. There is no limit to how many hours you can work. It’s your earnings that are important.

If you are on Universal Credit but you don’t have a work allowance, your payment will be reduced by 63p for every £1 you earn. So, your income from work and Universal Credit combined will be more than from Universal Credit alone.

When you get a work allowance

A work allowance will allow you to earn a certain amount before your Universal Credit is reduced. You will be entitled to a work allowance if you have the following:

• Responsibility for a child or young person
• A disability or health condition that affects your ability to work

If you get help with housing costs, you can earn up to £293 per month without any reduction in your Universal Credit payments.

If you don’t get help with housing costs, you can earn up to £515 per month without any reduction in your Universal Credit payments.

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What if I earn more than the work allowance?

The Universal Credit reduction will be made on the amount greater than the work allowance.

So, for a person on Universal Credit with a work allowance of £293 per month that is earning £500 per month, the reduction will be made on £207 (£500 – £293 = £207).

For every £1 earned, Universal Credit will be reduced by 63p. So the total reduction will be £130.41 (207 x 0.63).

What about couples?

If you are married or in a civil partnership and receive a joint Universal Credit payment, your combined earnings will be taken into consideration when working out how much Universal Credit you will get.

Can I get Universal Credit when self-employed?

Yes, you can, but how much you can earn on Universal Credit will be dependent on your circumstances and earnings.

If you are receiving a grant through the Self-Employment Income Support Scheme (SEISS), then this will be treated as earnings. If you receive tax credits, then this will stop when you apply for Universal Credit, and it will not be possible to make a new claim for tax credits in the future.

It is worth checking to see whether other benefits might be more suitable if you are self-employed. Further information is available from the Universal Credit website.

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When do Universal Credit payments stop?

As your earnings increase, your Universal Credit payments will fall. Depending on how much Universal Credit you receive, there will be a limit on the amount you can earn while claiming Universal Credit. Once you reach this limit, your Universal Credit payments will stop and you will be notified.

Can I begin claiming Universal Credit again if my earnings fall?

Yes, you can, but how you claim will depend on the period of time since your last payment. The criteria are as follows:

• If you received your last payment within the previous six months, you can restart an old claim.
• You will have to make a new claim if you received your last payment more than six months ago. In this situation, you will have to wait around five weeks before receiving your first payment.

You can restart an old claim or make a new claim by signing into your Universal Credit account.

Where can I go for more information?

For further information, check our article on Universal Credit. If you want to work out how much you can earn on Universal Credit, check out the government’s benefits calculators.

The post How much can you earn on Universal Credit? appeared first on The Motley Fool UK.

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Just because we’re spending more time at home, doesn’t mean we can’t have the occasional shopping fix. But buying items online can often lead to disappointment, so it’s a good idea to know about the credit card refund rules just in case. Let’s take a look at seven things worth knowing when it comes to refunds.

1. The refund must go to the credit card used for payment

A refund can only be made to the card you used to pay for the goods in the first place. It cannot be paid to another credit card or into a bank account.

2. A refund to an empty card will result in a negative balance

When a refund is made to a credit card with no outstanding balance, the account will end up with what is known as a negative balance. This just means that your account will be in credit.

How a negative balance appears on your account can vary depending on the credit card provider. Generally, a refund tends to appear on your statement in the same way as a transaction made by you when you pay your credit card bill.

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3. Negative balances can be transferred

If the refund is for a large amount, it is probably worth arranging to transfer the money to a current account. This will allow you to earn interest on the amount. You will need to contact your credit card provider and they can arrange this for you.

Alternatively, you can choose to leave the balance on your credit card and use it for future purchases.

4. You can only transfer credit amounts

If you owe money on your credit card, then the refund will reduce the outstanding balance.

According to the credit card refund rules, you can only transfer the amount by which your account is in credit.

So, if you owe £200 on your credit card and receive a refund of £800, you will end up £600 in credit. The maximum amount you will be able to transfer is £600.

If you owe £1,000 on your credit card and you receive a refund of £200 you will end up owing £800. You will not be able to transfer the refund amount.

5. The Consumer Rights Act protects all credit card purchases

The Consumer Rights Act protects you in the event that you purchase faulty goods. This includes the right to a full refund within 30 days. After 30 days, you can get a repair or replacement.

Further details on the Consumer Rights Act 2015 are available on the gov.uk website.

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6. Your credit card provider is jointly liable

Thanks to Section 75 of the Consumer Credit Act, your credit card provider is equally responsible for any breach of contract by the retailer for purchases greater than £100 and less than £30,000.

This means that if something goes wrong with your purchase and you want a refund, you don’t necessarily have to contact the retailer. You can claim a refund from the credit card company.

7. Some PayPal transactions are not protected

For credit card transactions using PayPal, Section 75 protection applies if you are buying from a company that has a ‘Commercial Entity Agreement’ with PayPal.

PayPal transactions to companies without this agreement are not eligible for Section 75 protection.

However, PayPal has its own buyer protection, so it’s worth checking their terms and conditions if you use PayPal regularly.

The post Credit card refund rules: everything you need to know appeared first on The Motley Fool UK.

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Employees are treated as a safer bet by lenders, but this doesn’t mean you can’t get a mortgage if you are self-employed. According to the experts at business financial platform Tide, here are the top tips for securing a self-employed mortgage.

1. Get your accounts in order

A lender will want evidence that you have your business finances under control. They will also want proof of a steady income.

According to Oliver Prill, Tide CEO, the majority of lenders will want to see at least 2 to 3 years of certified accounts. These are accounts that have been prepared by a qualified chartered accountant.

2. Maintain a good credit score

As part of your mortgage application, the lender will check your credit score. The higher your score, the greater the chance your application will be accepted. It’s therefore important to maintain a good credit score before applying for a self-employed mortgage.

If you are uncertain about your credit score, you can check with the three credit reference agencies for free. They are Experian, Equifax and TransUnion.

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3. Stay on budget

As part of your application, lenders will undertake what is known as an affordability assessment. This is an examination of your household finances to make sure you can afford to take on a mortgage.

In the months before your application, stick to your budget. Keep your expenditure to a minimum and don’t make any big purchases such as a luxury holiday.

4. Be realistic

Let’s face it, not everyone that wants to become a homeowner is in a position to buy a home. With this in mind, it’s a good idea to take a critical look at your financial situation before applying for a self-employed mortgage.

If you are struggling to make ends meet, it’s highly unlikely that your application will be successful. If this happens, it could negatively affect your credit score and you will need to wait before making another application.

Look at your finances with a critical eye. For further information, check out our article on the seven things that could stop you from getting a mortgage.

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5. Consider saving for a bigger deposit

While it’s now possible to get a mortgage with a 5% deposit, that may not be the case if you are self-employed. Unfortunately, lenders will often insist that you have a deposit of at least 20% when applying for a self-employed mortgage.

Generally, when it comes to deposits, the larger the better. It’s worth waiting a while until you have a bigger deposit before submitting an application.

6. Get professional advice

A mortgage broker will give you professional advice on what type of mortgage would suit you. They will search the market for the best deal and help you with your application.

If you are applying for a self-employed mortgage, it is worth consulting a mortgage broker who can guide you through the application. For further information, check out our article on how to choose a mortgage broker.

Further information

If you have never had a mortgage before, it’s a good idea to undertake some research before seeking professional advice. Further information is available in our Complete Guide to Mortgages.

The post Top tips for securing a self-employed mortgage appeared first on The Motley Fool UK.

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Mortgage arrears

From your lender’s point of view, you are in mortgage arrears when you miss the first payment. At this stage, your lender will typically offer you a two-week grace period before contacting you.

Thankfully, most lenders will try and find a way for you to keep your home. This is because a bank repossession followed by a sale to pay the outstanding debt takes a lot of time and effort. So most lenders view this action as a last resort.

There are a number of possible ways you could deal with mortgage arrears.

Paying off the arrears in instalments

If you have some money left over after all the bills are paid (including the mortgage) each month, the bank may suggest you use this to pay the arrears.

You will need to work out how much you can afford to pay. It’s a good idea to work out a budget before talking to the lender.

Reducing the monthly payments

The bank may allow you to reduce your monthly payments in the following ways:

• Extending the term of your mortgage
• Switching to an interest-only mortgage
• Taking a repayment holiday

Capitalising your arrears

If the value of your home is higher than the outstanding balance of your mortgage, the lender might allow you to add the arrears to the mortgage and pay the total over the mortgage term.

Selling the property

If you think your situation is not going to improve, you could consider selling your home. While this is an option, you will need to make sure that:

• The value of the property is greater than the outstanding balance of the mortgage.
• You have somewhere else to live.
• You have a plan of action. You will need to make sure that you have enough money to pay for the fees and charges associated with selling your home.

Possession action

This is usually what happens if you don’t pay your mortgage and you cannot agree on an arrears repayment method. In addition, you will have typically missed at least three months’ worth of mortgage payments, but this time period can vary depending on the lender.

A lender must give you two weeks’ notice before they apply to the court for a possession order. When the action starts, you will receive court papers, including a claim for possession of the property.

Prior to court attendance, it’s a good idea to seek legal advice. During the court hearing, a judge will decide on whether the lender can take possession.

Bear in mind that if you can come to an acceptable agreement with the lender at any point during the process, the possession order can be suspended.

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Eviction

If the lender is granted a possession order, you will be given a date by which time you should leave your home. This is normally 28 days after the hearing.

There is no specific procedure for an eviction process, but bailiffs must act reasonably. A representative such as an estate agent will attend the eviction so that the keys can be handed over.

Take home

If you are struggling to make mortgage payments, the most beneficial step you can take is to seek help and advice sooner rather than later. Dealing with the problem as soon as it arises will give you more options.

For more information on what happens when you don’t pay your mortgage, contact the Citizen’s Advice, Shelter Legal or Step Change. Check the Money Advice Service for advice on government help if you are unable to pay your mortgage.

If you need legal advice, it’s worth checking to see whether you are eligible for legal aid. Further information is available on the gov.uk website.

The post What happens if I don’t pay my mortgage? appeared first on The Motley Fool UK.

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Whether you are sending money to relatives or buying a property overseas, there are a number of different methods to send money abroad. We take a look at the safest and most cost-effective options.

Things to consider

Your choice of method to send money abroad will depend on a number of factors.

Fees and charges

Companies that organise foreign exchange money transfers can charge you in three different ways:

1. The person sending the money has to pay a fee.
2. The person receiving the money has to pay a fee.
3. Many companies offering their services ‘free of commission’ will modify the exchange rate in their favour.

Amount

Fees and charges can vary depending on the amount you are sending and the method you use. Many companies charge lower fees and better exchange rates for larger amounts.

Type of currency

As a rule of thumb, transferring ‘well-known’ currencies such as euros or US dollars tends to be cheaper and easier.

You may have problems finding a company that will transfer lesser-known currencies, and if you do, they may charge a higher rate.

Speed

Some methods are faster than others, so if you need a quick transfer you will need to choose accordingly.

Frequency

If you want to send money regularly to the same location, a more permanent solution might be best, such as a foreign bank account.

Best methods for sending money abroad

There are three main methods to send money abroad.

1. Using your bank or building society

This is a safe, secure and convenient method. If you contact your bank or building society they will talk you through the process.

You will need an International Bank Account Number (IBAN) and the Bank Identifier Code (BIC) for both your bank and the bank that will receive the funds.

The main disadvantage of using this method is that you may not get the best deal on larger amounts. Also, this type of transfer takes four to six business days, so it’s not the fastest option.

2. Using a specialist money transfer company

Examples of this type of company include Western Union, XE Money Transfer and CurrencyFair.

No account is necessary, and the transaction can be completed the same day.

Once the fee is paid and the money to be transferred is submitted, the sender is given a reference number. This number is given to the receiver who can use it to collect the money at an overseas office.

Before committing to this method, make sure you are aware of the fees and charges. They can be high depending on the company. Bear in mind that this type of company is not covered by the Financial Services Compensation Scheme (FSCS) so your funds are not protected if they go bust.

3. Using a foreign exchange broker

This method is useful for sending larger sums of money abroad. These brokers tend to charge lower fees and competitive exchange rates when transferring larger sums. This type of transaction can be completed the same day.

You may need to open an account to use this type of service, so you may need to plan ahead. Foreign exchange brokers are not covered by the FSCS.

Take home

If you are planning to send money abroad, think about your requirements first. This will have a big influence on the method you choose. Further information on sending money overseas is available from the Money Advice Service.

If you want to buy foreign currency for a holiday, check out our articles on how to buy travel money online and how to use an online currency exchange.

The post The best ways to send money abroad appeared first on The Motley Fool UK.

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If you are nearing retirement, you’ll need to start thinking about your future income when you stop working. This article covers three steps you should take and five key questions you should ask before taking flexible pension payments, according to Hargreaves Lansdown.

Things to do beforehand

It’s a good idea to start planning your retirement at least two years before your retirement date. Before deciding on your pension drawdown method, there are three steps you should consider taking.

1. Put together an emergency fund

According to Nathan Long, senior analyst at Hargreaves Lansdown, it’s a good idea to have an emergency fund large enough to pay for one to three years worth of expenses in an easily accessible account.

This may seem like a large amount, but remember that you will be on a fixed income. It will be important to have some extra financial insurance just in case.

2. Make sure you understand your options

It is important that you understand how pension drawdown works. In addition, make sure you understand the alternative options available to you, such as buying an annuity.

If you are unsure about your options, it might be worth seeking financial advice. For more information on how to find a financial adviser, check out our step-by-step guide.

3. Know what you want from your retirement

Think about what you want from your retirement and how much it will cost. This might include living in a different area or taking up new hobbies.

It is important to think through your plans carefully because they will have an effect on your expenses. For further information, check out our article on tips for planning your retirement income.

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Five questions to ask before taking flexible pension payments

Before taking flexible pension payments, there are five questions you should consider.

1. How much do you need to live on?

The amount you will need to live on will be influenced by two basic types of expenses:

• Essential expenses – including housing, groceries, utilities, medication and local transport.
• Non-essential expenses – including holidays, socialising and hobbies.

It is likely that your expenses will change with retirement. For example, you won’t have any housing expenses if you’ve paid off your mortgage. Similarly, your transportation costs could fall if you are no longer doing the daily commute.

2. How can you make your pension last throughout retirement?

According to Hargreaves Lansdown, one common way to do this is to stick to spending the natural yield of your investments. If you only spend the natural yield, your pension pot will remain untouched and will continue to generate an income throughout your retirement.

A typical yield is around 3% to 4% of your pension pot every year. So if you have a pension pot worth £500,000, the maximum yield will be £20,000.

Be aware that if you decide to take larger flexible pension payments, there is a risk that you could run out of money. This is an even higher risk if the yield falls, which could happen during an economic downturn.

It is better to use an emergency fund as income during a market downturn instead of your pension.

3. Where should you invest the money?

If you have the right asset mix, your pension should be able to withstand any market volatility. Reviewing your portfolio every year will ensure you do not withdraw more than the natural yield.

Keep an eye on annuity rates as you get older. They tend to improve with age and you could decide to buy one later on.

You could adopt a blended approach, using an annuity for your essential expenses and flexible pension payments for non-essential expenses.

4. How should you take account of dividend fluctuations?

It is better to focus on the natural yield rather than changes in dividends. In any case, history shows that dividend payouts recover fairly quickly if they do fall. An emergency fund can be used to supplement any possible shortfall.

5. How should you take account of market movements?

If you have diversified your portfolio, this will protect you from extreme market volatility. If the market does fall, it is important to wait it out rather than panic sell. You can use your emergency fund in the meantime.

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Take home

With careful retirement planning, you will be prepared for any market uncertainty. You will be free to spend your retirement doing things you enjoy rather than worrying about your income.

The post 5 questions to ask before taking flexible pension payments appeared first on The Motley Fool UK.

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When you retire, the chances are that the majority of your time will be your own. If you plan to spend this time in your local area, then choosing where you want to retire is important. With this in mind, Fenetic Wellbeing asked 1,000 survey participants what makes an area good to retire in. We take a look at the results.

What makes a good retirement area?

According to the survey, there were two main factors that participants would consider when choosing a place to retire.

1. Crime rates

The crime rate proved to be the biggest factor when participants were asked what makes a good place to retire to.

In the survey, 59.3% of participants said they would consider moving to another area if it had a lower crime rate than the area in which they currently live.

2. Life expectancy

Unsurprisingly, life expectancy was another major consideration, with 79.8% of participants saying they would consider moving to an area if the life expectancy was higher than where they lived.

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Are there any other factors?

If you are thinking about relocating when you retire, there are other factors that are worth considering.

The average cost of living

If you want to reduce your living expenses, you might want to move to an area with a lower average cost of living.

House prices might be of particular interest to you. This is especially the case if you want to release equity in your home by relocating to an area where house prices are lower.

For further information, check out our article on great places to retire in the UK and the average cost to live there.

Strong relationship ties

This is another popular reason to relocate on retirement. If you have more free time, you may want to move closer to your relatives so you can spend quality time with them.

Relationship ties don’t necessarily have to be family-related. You might want to move to a place with a familiar community. For example, this could be a place where you grew up, or a place where you used to live.

Transport links

Good transport links are a consideration for a number of different reasons.

If you want to spend much of your time travelling and seeing the world, then it’s worth selecting an area with easy access to a major international airport.

If you drive, you could move to an area where local transport links are not as extensive. However, make allowances for your future needs, since there may come a time when driving is not an option.

Access to healthcare

It’s inevitable that we will all need more healthcare as we get older. If you have concerns about the so-called ‘postcode lottery’ when it comes to healthcare, then it will be worth doing some research about where to retire for the best healthcare.

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Take home

Thinking about where you want to retire should be a major part of retirement planning. This will depend on what you want your retirement to look like, so think about it carefully.

While the present is important, your future needs should be considered as well. Factors such as healthcare needs and easy access to friends and family will become more important as you get older.

The post Crime rate is the biggest factor when deciding where to retire appeared first on The Motley Fool UK.

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If you are planning a family, you might be interested in finding out the cost of raising a child in the UK. It helps to be prepared after all. Life insurance comparison site Reassured has calculated the costs involved in raising a child until 18 in the UK. We take a look.

What is the average cost?

The basic cost of raising a child up to the age of 18 in the UK is £71,611 for a couple and £97,862 for a single-parent family.

The cost can depend on the gender of the child, since it costs up to £79,176 to raise a boy and up to £108,884 to raise a girl.

For all children, when taking into account additional costs this increases to £152,747 for a couple and £185,413 for a single-parent family.

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What are the additional costs?

According to the study, there are several additional costs involved.

Associated housing costs

As well as rent and mortgage payments, UK households spend £1,566 a year on water, electricity and gas.

Food

UK households spend an average of £4,805 a year on food.

Clothing

UK households spend £11,723 on clothes for girls and £5,887 on clothes for boys. On average, this amounts to £8,805 per year per child.

Are there any other costs?

Yes, there are a number of other possible costs to consider when raising a child in the UK.

Childcare

Childcare can be expensive, taking up as much as half of the overall cost of raising a child. Taking time away from the world of work to look after your children could reduce your childcare bill by a considerable amount.

You can also check out our article for useful information on how to budget for childcare costs.

Hobbies and pastimes

This includes anything from after school clubs to days out and other extracurricular activities. You will need to factor in the cost of equipment, transportation and entry or membership fees.

Education

While it’s true that state education is free, you may want to privately educate your children. If you decide to do this, you will need to do some research. For further information check out our article on private education.

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What about government help?

There are benefits that you can claim for help with the cost of raising a child in the UK.

Child Benefit

You will get child benefit if you are responsible for raising a child who is:

• Under 16 years of age
• Under 20 years of age and in approved education or training

Only one person can claim Child Benefit. There is no limit on how many children you can claim for. The benefit is paid every four weeks.

For information on how to apply, check the gov.uk website. Also, check out our article on how child benefit can help save you money.

Child Tax Credit

You can make a claim if you already get Working Tax Credit. The amount you will receive will depend on the number of children you have. Child Tax Credit will not affect any Child Benefit you receive.

For information on Child Tax Credit, check the gov.uk website. You can also check out our article on Child Tax Credit.

Tax-Free childcare

You can get up to £500 every three months for each of your children to help with the costs of childcare, up to a maximum of £2,000 a year. This increases to £1,000 every three months, up to a maximum of £4,000 a year, if your child is disabled.

Further information on how to claim, and what you can use the money for, is available from the gov.uk website.

Finally

It might seem daunting, but remember that the amounts used in this article are average costs. They give a rough idea of how much you should expect to spend on raising children.

Bear in mind that with some careful consideration, there are many different ways you can save money.

The post The basic cost of raising a child until 18 in the UK is £71,611 appeared first on The Motley Fool UK.

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Whether it’s a broken boiler, a new kitchen or a much needed holiday, when it comes to financing, a bank loan is one possible option. If you want to know how to get a loan from a bank, follow this step-by-step guide.

1. Make sure you meet the basic criteria

It’s important to do this before you apply. Exact requirements vary depending on the lender, but the main criteria are largely the same.

Age

You will need to be aged 18 or over to apply for a loan in your own right. Some banks require you to be over 25.

Residency

To apply for a personal loan with a UK bank, you will need to be a UK resident. Some lenders define this as having lived in the UK for at least three years. Many lenders exclude the Channel Islands and the Isle of Man.

Regular employment

Lenders generally require borrowers to have a regular income. Some will require you to have an annual income of at least £15,000.

Current account

Many lenders prefer you to have a current account with them. It’s often easier to apply for a loan with the bank where you have a current account.

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2. Work out the amount and repayment term

Before you apply, work out the amount you can afford to borrow over a realistic time period. Most banks have loan calculators that can work out the repayments when you define the loan amount and term.

It’s important that you are realistic. If you are unable to repay the loan within a specific time period without sacrificing your food bill, then you need to need to do one of two things:

1. Reduce the loan amount
2. Increase the time taken to repay it

Either of these actions will reduce the size of each repayment.

When you apply for a bank loan, your income will be taken into account. If you are unable to work out how to make ends meet while repaying the loan, then chances are the bank will pick up on this and reject your application.

3. Check your credit score

This is an important step. When you apply for a loan, the bank will check your credit history.

Most lenders stipulate that they will not give bank loans to applicants that have a history of bad credit or have been declined credit in the month prior to the application.

When considering how to get a loan from a bank, you will need a good credit score. If you are unsure of your credit rating, it might be an idea to check your records at the three main credit reference agencies (Equifax, Experian and Trans Union) before you apply.

For further information, check out our article on understanding your credit report and your credit score.

4. Decide on the type of loan you want

You can choose between two basic types of loan.

Secured loan

The money you borrow is secured against an asset that will be taken if you can’t pay back the loan. Typical assets include your home or a car.

This type of loan is regarded as low risk, so it is used to borrow large sums of money – typically more than £10,000. The interest rate tends to be lower.

Unsecured loan

The process is more straightforward because you do not have to use an asset as collateral in case of non-payment. This type of loan is considered a higher risk by the lender. As a result, the amount you can borrow tends to be less than £10,000 and the interest rate is usually higher.

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5. Submit an application

Loan applications are quite straightforward. You can usually fill out a form and submit it online or you can apply over the telephone.

You can often get approved in a matter of minutes following the submission of your application. Once you are approved, the lender will send you the loan details, including when you will receive the funds.

When thinking about how to get a loan from a bank, the process is quicker if you apply at a bank where you are an existing account holder.

What if your application is unsuccessful?

If your application is rejected you will need to wait at least one month before trying again.

If you are seeking a loan because you are struggling with debt, then debt advice may be a better option. Agencies that offer free, impartial advice include Citizen’s Advice, Step Change and the Debt Advice Foundation.

The post How to get a loan from a bank appeared first on The Motley Fool UK.

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Planning for your retirement can be a long process that evolves and changes over time. Read this article for useful tips on how to plan your retirement income.

Start as early as you can

When it comes to retirement planning, it really helps if you are an early bird. But this doesn’t mean you have to deposit vast sums of money into your pension plan in your early 20s.

In your 20s and 30s, you will have more immediate financial priorities, such as getting on the property ladder. You may also want to spend some of your income on life experiences, such as world travel and socialising.

At this stage, retirement planning should be taking place in the background. In the age of auto-enrollment, funding your retirement should start with your first job. Making the minimum contribution will be a good start.

You are more likely to change jobs during this time, so make sure you keep good employment records. This will help you when you need to consolidate your pensions from different jobs.

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Define your retirement

Think about what you want your retirement to look like. If you define your retirement, you will have a better idea of your ideal retirement income.

Defining your retirement will be easier to do when you are older. This is because you will have gained experiences over time that will give you an idea of what you enjoy and where you want to be.

Try and think from a financial perspective. Interests such as skiing and photography, for example, can be expensive, so you will need to make allowances for extra income.

Alternatively, if you live and work in the city but want to retire in the country, it might be possible to sell a property and gain some extra funds. Or if you have a passion for DIY, you could do odd jobs part-time for some extra cash.

Track your expenditure

If you track your expenditure while you are still working, it will be easier to predict your day-to-day living expenses when you retire.

It’s a good idea to get into the habit of budgeting and tracking your expenses anyway. This will help to promote good money habits and prevent unnecessary spending.

Think about when

Think about when you want to start your retirement. This will help to keep you focused.

If you are younger, don’t be too specific. Make allowances for the fact that your retirement date may change. This is understandable because life can change in unexpected ways.

You may end up working in a job that you enjoy and decide to delay your retirement. Alternatively, you might come into a windfall and decide to retire early.

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Keep your debts under control

When you’re younger, it will be important to keep your debts under control. As you get older, aim to clear all of your personal debts before your retire.

An additional financial burden is the last thing you should have when you stop working. In retirement, chances are you will be on a fixed income. Existing debt will reduce your retirement income.

Seek professional advice

It’s a good idea to consult a pensions adviser around three to five years before you are due to retire. This will allow you to reduce the risk of your investments and plan how you will start drawing from your pension.

Pension Wise is a government service that offers free impartial advice on what options are available to you. If you are aged 50 or over and have a UK-based defined contribution pension, you can book a 45-minute appointment with a guidance specialist.

For further information, check out our article on when you need an adviser for your pension.

Take home

Planning for your retirement income doesn’t have to be a chore. Some simple steps implemented as early as possible are all you need. It’s a step-by-step process that does take time, but it will be worth it when you are spending your retirement doing things you love rather than worrying about money.

The post Tips for planning your retirement income appeared first on The Motley Fool UK.

More reading

• Why is everyone selling BP shares?
• Is this market correction a once-in-a-decade chance to buy ultra-high-yield income stocks?
• Down 25% in a month! Are these the 3 best stocks to buy in today’s correction… or the worst?
• This FTSE small-cap stock can surge 105%, says one broker
• £10,000 invested in ultra-high yield Legal & General shares on 5 April last year is now worth…