The three stages of retiring on your own terms


What age do you picture yourself retiring?

Are you looking forward to an early retirement which allows you to spend time with your family and cross off some of the things you’ve always wanted to do?

If not, what’s stopping you?

According to a report from Scottish Widows, 10 million (20%) of UK adults expect that they will have to work until they are forced to stop due to physical health problems. A further three million (6%) believe that they will not be able to retire at all and will continue to work in some capacity for the rest of their life.

Of course, being able to retire at an age to suit you will rely on one main factor; money.

To plan your retirement effectively, you will need to know:

  • How long you will be retired; this depends on the age you wish to stop working and your estimated life expectancy
  • The lifestyle you aim to lead during retirement and how much it will cost
  • How much you will need to provide a sustainable income which will support that lifestyle for the rest of your life

There are three key stages in retirement planning:

1. Calculating

You might be worried if maths isn’t your strongest skill. But don’t panic, it’s not too complicated to work out how much you will need to support your dream retirement lifestyle. Especially, if you decide to talk to us, we’ll do the hard work for you.

The foundation of your retirement income will come from your State Pension. You can see how much you will be entitled to by clicking here.

However, you will not begin receiving it until you reach State Pension Age. The age at which you can claim will depend on when you were born, and you can see a forecast of when that might be, here.

If you plan to retire before your State Pension Age, you will need to create income from your own resources to bridge the gap. Whether this comes from your pension, investments, savings or potential inheritances, you will need to ensure that this can support your lifestyle in the years before State Pension Age kicks in.

Once your State Pension becomes available, you will be able to reduce the income you take from other sources. This means that you will need to make provisions to ensure that the extra cash is available during early retirement.

How much you will have when all of your income sources are pooled together can be calculated using this tool from the Money Advice Service, or we can do it for you.

2. Amending

By this point, you should know how much you can expect to receive in retirement income, and whether it will be enough to support you for the rest of your life. You can now begin to adjust your strategy to improve the situation. What you adjust will depend on your situation:

  • If you won’t have enough money: You will need to adjust your current saving and investment habits to increase the amount available when you stop working. Alternatively, you could change your retirement objectives, to enable you to live on less. Furthermore, you could delay the age at which you stop working, so that you can generate income for longer.
  • If you will have just enough money: You’re in the clear, but it might be worth considering making slight adjustments to pad out your financial safety net; you can never be too safe!
  • If you will have plenty of money: That’s great news! Now you are free to plan how you will pass that extra cash on to loved ones. Or maybe you’d like to join the SKI (Spending Kid’s Inheritance) generation and move your retirement date forward (or just plan to do more fun things when you get there!)

 3. Accepting help

There are several places you can turn to for help with retirement planning, but nothing can replace talking to a financial adviser. Not only can they provide you with suggestions from the point of view of an outsider to the situation, but they are armed with the knowledge, qualifications and software to show you how your future could look if you follow certain paths.

Whatever decisions you are faced with when planning for retirement, financial advice can help you to feel more confident in your choices and ensure that you are fully informed and backed by professionals with years of experience.

For more information and help with retirement planning, get in touch with Bev or Sarah on 0115 933 8433.