7 tips for boosting confidence in your retirement finances


Planning for retirement is an essential way of securing your financial future. But research suggests that many are still worried about whether they’re putting enough away to secure the lifestyle they want. Having confidence in your plans means you’re in a better position to enjoy life now and in the future.

Even if you’re diligently saving into a pension, you may still be worried about the income it will deliver. This could be for a range of reasons, from not knowing how much is enough to feeling unsure how you’ll access it.

According to a study from the Pensions and Lifetime Savings Association (PLSA):

  • Over half of savers are not confident they’re saving enough for retirement
  • 37% wrongly think the auto-enrolment minimum pension contribution is a ‘recommended amount’
  • Just a fifth of people are confident they’re putting enough away for retirement

Julian Mund, Chief Executive of PLSA, said: “It’s clear that savers are still unsure about exactly what their pensions are worth and what this will translate to in terms of real income in their retirement years.”

So, what can you do to get to grips with your pension?

1. Review your current savings

First, how much do you currently have in pensions? You should receive an annual statement, showing contributions over the last 12 months and current value, from your provider. Usually, you can also log in online to get an up-to-date picture too. Without understanding how your pensions are stacking up, you could be worried about your financial future when you’re actually on track.

Over your working life, you’ve probably paid into several different pensions. Make sure you review all the pensions you’ve contributed to. Even small pots you contributed to at the beginning of your career can be a useful boost, especially when you consider potential investment gains. If you’ve lost the details of a pension, you can find more information on tracking them down here.

2. Check the projected values

When reviewing your pension value, remember to check what the projected value is too. This gives you an indication of how much your pension will be worth at the point of retirement. To get this calculation, pension providers will make certain assumptions, including investment performance. As a result, projected values are not guaranteed.

Most pensions will have automatically assumed you’ll retire in line with State Pension age. If you hope to retire early or plan to work for longer, make sure you update your profile to reflect this.

3. Calculate the income you need

There are many guidelines around for what you should save into a pension. You may have heard your goals should be ‘£300,000’ or you’ll need two-thirds of your current annual income to maintain your lifestyle. However, these are just rough guides. To feel confident in the steps you’re taking, think about the lifestyle you hope to achieve in retirement and the outgoings this will lead to.

You should split your outgoings into two lists. In the first, include essential costs. This should include things like utility bills and grocery shopping, to create a minimum income goal. The next list is far more fun, it should cover the expenses that will help you build the lifestyle you want. It could feature holidays, hobbies and entertainment. You should also think about the one-off costs that you may choose to fund from your pension, such as a home renovation project or a once in a lifetime trip.

With an idea of your annual spend, you can use this to create an overall pension goal. You’ll need to consider how long your pension will need to support you for. Remember, it’s not uncommon to spend 30 or 40 years in retirement.

4. Include income from other sources

When you look at your pension goal, it can be daunting. However, you may have other sources of income in retirement that can supplement this. For instance, an investment portfolio that aims to deliver a reliable income or Buy to Let properties. Once you factor these into plans, you should feel more confident about achieving a comfortable retirement lifestyle.

5. Understand your options at the point of retirement

When you look at how much is in your pension, it can be difficult to understand how this will translate into retirement income. When the time is right for accessing your pension, there are many different options. Understanding these can help you see how savings can be used. For example, an Annuity can provide financial security in retirement but if your lifestyle would benefit from a varied income, it may not be the right option for you.

Answering questions like the ones below can help you see how different retirement income options are suited to you.

  • Do you intend to take a tax-free lump sum from your pension?
  • Would you prefer a reliable or flexible income?
  • How do you feel about some of your pension savings remaining invested?
  • Will your income needs vary throughout retirement?
  • Are you comfortable managing your own pension?

Spending some time looking at the different options, such as an Annuity or Flexi-Access Drawdown, can boost your confidence and knowledge.

6. Speak to your financial adviser

Planning retirement finances often involves drawing together multiple sources of income and gaining an understanding of how these can be used. As a result, it can be complex. This is where a financial adviser can offer you support. Having another pair of eyes look over your plans and provisions is valuable on its own. However, a financial adviser will also be able to offer you advice on how to remain on track, where your efforts would be better focused and how decisions you make now will have an impact in the future.

If you’re unsure that you’re saving enough for retirement, working with a financial adviser can give you reassurance. Many people find they’re in a better position than they first believed. However, if this isn’t the case, a financial adviser can help you create a plan for reaching your goals.

7. Don’t panic

Finally, when you calculate the sum you aim to have in your pension before retiring, it can seem daunting at first glance. However, whether it’s a figure used as a general guide or one you’ve calculated, don’t panic.

There are often things you can do to improve your retirement savings, especially if the milestone is still some way off. The most important thing is realising that there could be a shortfall, allowing you to take steps to rectify this where necessary. If you’re still worried about the retirement lifestyle you’re on track for, you may want to look at how other assets can supplement your income. Often, when looking at the bigger financial picture, people discover they’re in a better position than they first thought.

If you’d like to discuss your retirement plans, please get in touch.

Please note: 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 tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation, which are subject to change in the future.