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Don’t bury your head in the sand. Make your retirement plans a reality.

The main reason many people fall short of retiring when they want to is simply because they don’t start planning early enough. 

It’s become essential to plan for a much longer retirement than your parents would have imagined to be possible.  If you intend to retire in your mid-60s, retirement will likely make up about one-third of your entire life! Those of us who have yet to reach conventional retirement age will have to adopt a different approach to funding our lifestyles in older age than previous generations.

Careful planning means you’re more likely to enjoy everything you want in your early retirement years while also helping to safeguard your future retirement income. You can take control by answering a few questions.

When do you want to retire?

Today’s uncertain economic and political climate have resulted in considerable change to people’s expectations about their retirement age.  Changes to the state pension and the impact of an increasing life expectancy have also had a big effect. Over the next few decades, the average age of people retiring is forecast to rise considerably.   

It's so important to start early, and to make the most of the tax allowances, pension plans and other saving and investment options available.

How much do you need?

The precise amount you’ll need to save each month to retire at your chosen age depends on several factors including your current financial situation and the kind of lifestyle you plan on having in retirement. It may help to think as retirement as more than one life stage. 

Early Retirement: You may find this to be the most expensive phase of retirement, with increased spending to fund travel and hobbies, as well as supporting grandchildren and assisting adult children.

Middle Retirement: You may still travel and engage in hobbies during this phase, but medical appointments and physical limitations may start limiting your activities. Relaxation is likely to become a priority, with increased spending in medical expenses or maybe updates to make your home more accessible and equipment to make life easier.

Later Retirement: At this stage most people have less energy, less physical ability and need more doctor visits. In this phase, you may need to adjust your plan to accommodate medical and long-term care costs.

Will your pension be big enough?

It is essential to work out how much income you will need for your retirement and how much you will receive. To get an idea of how much you will have in retirement:

  •  Check how much is in your pension pot
  • Add the amount in your pension pot to your State Pension
  • Consider any other income you may have in retirement and if it is reliable
  • Work out the tax you will pay on your retirement income
  • Estimate the living costs you are likely to have

If you think that you will not have enough funds to live on when you retire, you could retire later and delay taking your pension, or you could put more into your pension pot now. Changes that came into force in April 2015 as part of the government’s pension reforms now give you much greater flexibility and control of your long-term financial planning. There are some great investment opportunities available for a financially healthy retirement.

Ways to boost your retirement fund

Keeping a close eye on pension schemes that you are making contributions towards is essential, as is being aware of any pension pots that you may have stopped paying into, perhaps because you’ve changed job. It’s important to ensure you don’t have money sitting in a poor-performing pension or one that’s suffering from high annual charges, or else it could damage your returns and impact your target retirement age.

Consolidating old pension pots into a current scheme, or with one provider, could prove beneficial. For one, it can help you keep track of your future finances more easily by having all your pension pots in one place and you could also save on fees.

Before transferring pensions, beware of any exit penalties or transfer fees that might apply. It’s also worth remembering that some old pensions, especially final salary schemes, have valuable benefits that would be lost if transferred, so you will need to do some homework, or better still, get some independent advice.

Understanding investment risk

As with any investment, individuals saving into a pension scheme need to consider their attitude towards risk and the effect this will have on the performance of their overall investment pot.

As you get nearer to your retirement date, it’s a good idea to review your attitude to risk and make any adjustments to your portfolio. You’re getting closer to deciding how you take income from your pension, so your attitude to risk may start to change.

Make your retirement plans a reality

The sooner you start putting money into a pension or a retirement plan, the better position you’re likely to be in later in life – and the more chance you may have of enjoying that dream retirement lifestyle.

If you are feeling concerned that the amount you will currently receive in retirement will not meet your retirement needs, we can help. Book a free consultation with us today and we can discuss your goals and how we can help put a plan in place that gives you the best chance of providing for the retirement you dream of.

Risk warning

As with all investing, your capital is at risk. The value of your portfolio can go down as well as up and you may get back less than you invest. Pension rules apply and tax rules may change in future. If you need help with pensions, seek financial advice. Projections are never a perfect predictor of future performance, and are intended as an aid to decision-making, not as a guarantee.


Which? expenditure figures based on a survey of 6,000 retired or semi-retired couples who are Which? members