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In an ideal world, we would all look forward to retirement. No more early alarms, crowded commutes, or office politics to contend with. Instead, here’s an opportunity to spend more of our time the way we would wish.
But, for lots of people, the prospect of retiring is somewhat more fraught. So much so, that it turns out many of us are burying our heads in the sand about the issue.
Fortunately, it’s never too late to start tackling the ‘R’ word – whether that’s having the necessary conversations or taking direct action. We hear from several financial experts for their advice on how best to make the transition a pleasurable one, both emotionally and financially.
What’s on this page?
A look at some recent figures suggests many of us are happy to dodge the retirement question.
Eyecatchingly, less than half (44%) of the over-55s have discussed their retirement finances with their spouse or partner, according to research from savings platform Moneybox.
Meanwhile, a similar proportion of adults (40%) over the age of 55 are yet to discuss their retirement plans with their families. With the state pension age currently transitioning from 67 to 68, that’s as little as 12 years before the big day comes.
Brian Byrnes, director of personal finance at Moneybox, says the findings suggest retirement is becoming a modern taboo. “For many families, retirement has become the conversation nobody wants to have.
“The problem is that avoiding the conversation doesn’t make the challenge disappear. In fact, it can leave people sleepwalking towards one of the biggest life transitions they’ll ever experience without a clear plan.”
Susan Hope, retirement expert at Scottish Widows, says it’s entirely natural to put off discussing retirement. “When we avoid talking about retirement, it’s rarely because of laziness,” she explains.
“It’s because doing so forces us to confront some of life's biggest, heaviest, uncertainties: ageing, changing health, shifting family relationships, and even our own identity once we stop working.
“When you couple those heavy emotional layers with the immediate, day-to-day pressures of just paying the bills, it’s entirely natural for people to push retirement into the 'too-difficult' box.”
Adam Vanstone, chartered financial planner at Chester Rose, says his experience with clients confirms this scenario. “When we speak with prospective clients, even those in their 50s and 60s, we find that many haven’t done any retirement planning.
“They have no idea what may, or may not, be possible. They’ll say ‘I think we could maybe live on x pounds per month’, rather than ‘this is what we will need to have the retirement to which we aspire’.”
But, unless you have a plan, there’s a risk that your retirement ends up being determined by circumstances rather than choice
Louise Bowman, chartered financial planner at Shackleton Advisers, warns: “If you don't plan ahead, you may discover much later than you'd like that you don't have enough money to retire when you hoped.”
So, what can you do to avoid lurching into retirement, unprepared?
Bowman says retirement planning shouldn’t start with a spreadsheet. “It should start with a conversation about what you actually want your life to look like.
“Too many people think retirement planning is all about pensions and investments, but there are really two parts to retirement: the financial side and the lifestyle side.”
Bowman says she encourages her clients to think about how they’ll spend their newfound time. “Do they want to travel? Spend more time with family? Volunteer? Take up hobbies?
“You can't spend decades working in a structured routine and then suddenly stop without giving some thought to what comes next.”
Susan Hope suggests sitting down with a blank sheet of paper. “No budgets allowed at first, just write down what a perfect week in retirement looks like. Get really honest about your goals and dreams. Let nothing be off-limits.”
Only once you have some sort of plan can you work out what your retirement will cost.
Bowman says: “The starting point is usually asking: what level of income would support the life I want? From there, we can look at whether that's achievable and what steps might be needed to get there.”
She adds: “I recently worked with somebody who thought she needed a part-time job in retirement. After looking at her finances, it turned out she didn't need the money at all. What she really wanted was companionship and purpose.
“Instead of finding an office job, she started volunteering at a big cat sanctuary and absolutely loves it. That's why I think the lifestyle conversation should come first.”
Susan Hope also says it makes sense to look at the UK Retirement Living Standards, a report from Pensions UK which gives an idea of where you might sit on the pensions ladder. “It’s a fantastic, practical tool that puts realistic figures around what a 'Minimum', 'Moderate', or 'Comfortable' lifestyle actually costs, which helps you balance living in the here-and-now with your needs tomorrow.
“From there, think about your 'Stop/Go' costs. What expenses will stop when you retire, like the mortgage or commuting. And what might start or increase, such as hobbies or heating bills?"
Next look at what you’ve got already. Bowman says: “It sounds obvious, but many people don't have a complete picture.
“Track down all your pensions, savings and investments and put them in one place. It doesn't have to be complicated – a spreadsheet is great, but even a simple list on a piece of paper is a good start.”
Make sure you get a state pension forecast, which tells you how much you’re in line to receive, when you can start claiming and whether you have gaps in your record that could be plugged with voluntary contributions.
You should also make sure you’ve got visibility of all your workplace pensions. If you think you’ve got one or two missing, it’s worth using the government’s free pension tracing service. Be wary of any service that requires you to pay a fee.
You won’t be alone if you’re nervous about this process, but Bowman says it can be reassuring. “People are often surprised by what they uncover. I've seen clients with a remarkable number of old pension pots from different jobs, all sitting in different places.”
If your finances aren’t quite on track, there’s still plenty you can do – especially if you still have a few years to go before retirement.
Working on household budgets and stepping up contributions is a start.
Bowman says: “Understand what you're spending each month. You'd be amazed how many people don't know exactly where their money goes. Looking at regular spending, reducing unnecessary costs and understanding your cashflow can often make a bigger difference than people expect.”
But squeezing your finances isn’t the only option.
“One of the biggest misconceptions is that retirement success is only about how much you contribute,” she adds.
“Contributions matter, of course, but you also need to understand where your money is invested. Many people pay into workplace pensions for years without ever checking whether the investment strategy is appropriate for them.”
It’s important not to take excessive risk, but switching into more appropriate funds could improve your pension’s performance. Cheaper passive funds may also reduce your costs without necessarily hurting returns.
Susan Hope adds: “You might also want to look at consolidating your pensions. If you have four or five different pots from old jobs, bringing them together into one place can make them much easier to manage, cut down on admin fees, and give you total clarity on what your savings are actually worth."
You could also consider delaying your ‘full retirement’ – if that’s practical. Adam Vanstone says: “Working a few extra years, potentially part-time, may allow you to save more, increase retirement benefits, and shorten the period your savings need to last.”
For many, it could also provide a gentler transition into retirement.
The R word can cause people to panic and worry, says Vanstone. “But retirement doesn’t have to be all-or-nothing; it can happen over time.”
Your plans don’t need to be set in stone either, you can keep things flexible. The key is to stop avoiding the subject. If you aren’t sure what to do, or are overwhelmed by your options, a financial planner can help.
Louise Bowman says: “Ultimately, retirement planning isn't just about preventing financial problems. It's about giving yourself options. The earlier you start talking about what you want from later life and how you're going to fund it, the more likely you are to have the freedom and confidence to enjoy it when the time comes.”
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