Kate Smith, Head of Pensions at Aegon, shares her top five tips for making a retirement plan, helping you boost your financial preparedness and wellbeing.
The latest research from Aegon’s thought-leading ‘Second 50’ campaign reveals that almost a third of people in the UK have no plans for how they’ll fund their retirement years (30%).
People without retirement plans are also four times more likely to feel stressed about their long-term finances (46%), compared to those with well-developed plans for later life (11%).
Over half of those without plans are concerned about running out of money in retirement (57%), more than double the proportion of people with a financial plan (22%).
Kate Smith, Head of Pensions at Aegon, comments: “With life expectancy having risen over the past decade, and economic challenges forcing us to think about our money more deeply, taking the time to prepare a clear plan for our retirement finances is becoming increasingly important. Not only could it help you to navigate the known and unknown costs of later life – but as our Second 50 research shows, it also has value in providing peace of mind and confidence, as well as reducing stress. We all deserve a retirement we can enjoy, whatever your financial reality. And having a plan doesn’t mean you have to follow strict rules every day or create a big, scary document. Simply understanding what you have, what you’ll likely need, what you’d like to do, and then coming back to review it every now and then can be just as effective.”
Kate’s five tips for writing a financial plan for retirement
Tip one: Know what you have
“The first step for any retirement plan is to understand what you’ll likely have when you stop working. And, if you have a partner that you share your finances with, don’t forget to talk to them too. Your state pension will probably be the foundation of your retirement income, so be sure to know when you can access it and what you’ll be entitled to. If you’ve worked at any point since 2012, it’s likely you were auto-enrolled into a workplace pension scheme at each company, so always track down any you may have left behind. And don’t forget any significant assets you may own, such as your property.”
Tip two: Consider what you need
“It can be hard to envision exactly what you’ll need in retirement, but try to paint a picture of your future self and estimate how much money you’ll need to achieve it. This should include continuing everyday expenses like your bills and groceries, as well as new costs that come with age, such as the possibility of funding home improvements or social care.”
Tip three: Think about what makes you happy
“Having a plan is about more than balancing your ins and outs; it’s about building a guide to funding a retirement that brings you joy and purpose. You don’t have to spend thousands to feel happy and fulfilled, so try to focus on the activities and expenses that spark the most joy for you.”
Tip four: Write it all down
“Research has proven that people who formalise their plans are significantly more likely to achieve their goals than those who don’t, so be sure to write your plan down in a way that’s easily understandable for you.”
Tip five: Review your plan regularly
“You don’t have to update your plan with every purchase you make, but as your situation or priorities change over time, it can be incredibly valuable to review your plan at regular intervals and make any necessary adjustments that allow you to feel confident you’re still on the right path.”
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