Frustrated by your retirement prospects? Here are 4 things you can do today

An older woman with her glasses off rubbing her eyes

You might be frustrated with your retirement prospects, but there are several steps you can take to improve them. Learn about 4 things you can do today.

After years of hard work and saving, you may be frustrated that your retirement prospects are not as secure as you had hoped.

The rising cost of living, increased life expectancy, and high inflation have all affected the financial security and retirement plans of many pension-age and pre-pension-age people, making it more challenging to sustain a desired standard of living throughout retirement.

Retirement Living Standards estimates that you need an income of around £43,000 a year to retire “comfortably” as a single person, and £59,000 for a couple. A “moderate” retirement lifestyle would demand around £31,000 and £43,000 respectively.

These relatively high figures have led more retirement-age people to continue to work, and there are more over-65s in the workplace than ever before.

Analysis of data from the Office for National Statistics (ONS) reveals that 11.4% of UK over-65s are now in work, more than double the 5.2% working at the start of the new millennium.

And many retirees who have left the workplace regret not saving more during their working life.

Research by Canada Life found that 17% of retirees said they would have increased pension contributions while working and 12% would have made lifestyle adjustments to save more for their later years. 8% said they wouldn’t have left work when they did and should have chosen to retire later.

Being proactive in the years leading up to your retirement and determining your priorities can help to ensure you are better prepared to enjoy a comfortable and fulfilling retirement on your terms.

In this article, you will read about:

  • How to proactively review and manage your pension as you approach retirement
  • Why writing a “retirement priority list” could help you plan more accurately
  • How to determine the savings you will need based on your desired retirement age
  • The benefits of creating a comprehensive retirement plan with a financial planner.

Read on to learn about the four things you can start doing today to alleviate your frustrations around retirement and improve your prospects in your post-work years.

  1. Review and manage your pension

Tracking down all your pension pots and then managing your total fund is a good place to start in maximising your retirement income.

If you are in a relationship, you could also work out the value of your combined pots. As you read earlier, couples generally need less collective income in their retirement to enjoy a comfortable standard of living.

It can be easy to lose track of workplace pensions from jobs you may have held many years ago.

Analysis conducted by the Centre for Economics and Business Research, on behalf of PensionBee, found that more than £50 billion of pension funds are at risk of being placed in abandoned accounts or spread across multiple lost pots.

If you think you have a lost pension pot, you can request statements from all your providers, past and present. If you have or had a workplace pension, then contact your employer for details of the provider.

If you are still struggling to make progress, then you can contact the Pension Tracing Service – a free government service that has access to a database of more than 200,000 pension schemes.

If you have multiple pension pots, you could consider consolidating them to make managing your pension easier, though speaking to a financial adviser before doing so can add value.

Once you have a clear idea of exactly how much you have in your pots, you can assess your fund in relation to your retirement plans and work out if you need to make any additional contributions.

In the final years of your working life, you may reach your peak earnings. So, making contributions to your pension from this income could be hugely valuable.

A financial planner can help you to assess an appropriate risk level for your pension funds, based on your proximity to retirement.

You can read more about this in our article on de-risking your pension as you approach your retirement years.

Having clarity and control over your pension fund offers a clear understanding of your current financial status and future needs, alleviating some of the confusion and frustration associated with retirement planning.

With an informed perspective, you can make strategic decisions that ensure a more secure and comfortable retirement.

  1. Write a retirement priority list

Everyone has plans and dreams for their retirement years, yet many find themselves disappointed when these aspirations go unfulfilled due to insufficient planning.

You may want to travel the world, do a course to develop your skills and passions, help your children or grandchildren get on the property ladder, buy a new home in an exotic location, or ensure you have enough wealth to pass on to your beneficiaries.

Trying to achieve all your retirement dreams may present financial challenges, or you might find you simply don’t have enough time or resources.

So, it could be beneficial to write a retirement priority list that orders your aspirations in terms of how important they are to you. Additionally, you might also want to estimate how much you will need to put aside for each one so you can determine which of your wish combinations are possible.

You may then find that there are certain plans you have to leave behind, or that by disregarding an expensive prospect, you can make space for two smaller ones.

Writing a retirement priority list ensures you focus on what matters most and allocate your resources effectively.

Though this may require making sacrifices, it means you can be motivated to attain what you know is within your reach. After all, it is better to achieve a few of your dreams than miss out on all of them.

  1. Figure out how much you will need to save based on your preferred retirement age

The age at which you retire has a significant effect on how much income you will have in your retirement.

Delaying your retirement by just one year means you will make an additional year’s worth of contributions to your pension and have one less year of retirement to fund – which, as you saw earlier, could be up to £43,000 for a single person.

The current State Pension Age is 66 (rising to 67 in 2028) and you can usually access your defined contribution pensions from 55 (rising to 57 in 2028).

Data from the ONS shows the current life expectancy for 55-year-olds to be 84 for men and 87 for women. This means that if you were to retire at 55, there is a good chance your pension would need to last around 30 years or more.

If you know when you want to retire, you can make a plan based on your projected retirement expenditure, the amount you have saved already, and the amount you need to save before your retirement to achieve your goals.

A financial planner can use cashflow modelling to approximate your expenses during your retirement. These might include regular expenditures, big one-off expenses, later-life care, and any wealth you want to leave your beneficiaries.

You can then factor in some of the unknown variables that will influence your retirement income, such as life expectancy, market performance, and inflation. This will give you an idea of the range of sums you may need for the retirement you desire.

You can then work out how much more you need to save to reach your goals at your desired retirement age.

You may find that you are on track to be able to retire at the age you want, or even that the sum of your total assets and their projected future value is more than you thought, meaning you could retire earlier than you had planned.

If you are not on track to reach your financial goals at your desired retirement age, then you might consider making changes to your financial plan to help you get there. Or, you could push back your retirement date by a year or two, which as you saw earlier, can have a considerable effect.

Though you may be frustrated by the prospect of a slightly delayed retirement, you can be comforted by the knowledge that you will be secure and have enough income to achieve everything that’s important to you.

  1. Create a comprehensive retirement plan with the help of a financial planner

A financial planner can work with you to develop a comprehensive plan that helps to alleviate any frustrations you have regarding your retirement and ensures you are best prepared to achieve your retirement dreams.

As well as using cashflow modelling to work out how much you’ll need to save to achieve your perfect retirement, they can assess your risk exposure based on your personal preferences and projected horizons, ensuring a well-balanced and resilient investment strategy.

They can also help you to work out how to draw a sustainable, tax-efficient income to help you avoid running out of money in later years.

Moreover, a financial planner can help you create an estate plan that encompasses your projected retirement expenditure and the inheritance you wish to leave for your beneficiaries. This means you won’t have to worry about your children, grandchildren, other relatives, or friends, as you will have a plan to support them when you are gone.

Financial planning takes a holistic approach that aligns your current and future finances with your retirement dreams and wider life goals. This comprehensive strategy not only provides clarity and direction but also alleviates the frustration of uncertainty, ensuring you feel confident and in control of your financial future.

To speak to a financial planner, get in touch.

Email us at hale@kelland.co.uk, or call 0161 929 8838.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The Financial Conduct Authority does not regulate cashflow planning.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

The Financial Conduct Authority does not regulate estate planning, tax planning or will writing.

 

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News & Views

June 4, 2024

Frustrated by your retirement prospects? Here are 4 things you can do today

You might be frustrated with your retirement prospects, but there are several steps you can take to improve them. Learn about 4 things you can do today.
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