When you think about the most popular retirement dreams, an adventurous cruise or having time to put your feet up might come to mind. Yet, a survey found the most common goal for retirement is to achieve financial security.
According to Legal & General, a huge 94% of Brits say their most important retirement dream is to feel financially secure for the rest of their life.
The results found there are other popular retirement goals too. However, many of them are related to finances in some way. So, it’s not surprising that feeling financially stable is a priority for the majority of people when planning their retirement.
According to the survey, retirement dreams include:
- Spending time with my family (90%)
- Being able to afford care or assistance if I need it (81%)
- Being able to afford major life events for my family, such as a wedding or new baby (73%)
- Travelling (72%)
- Supporting my family financially (69%).
Understanding the value of financial security later in life is positive. Despite this, the findings also indicate that reality could fall short for some retirees.
41% of retirees are spending more than they planned
The Legal & General study quizzed retirees about how the next chapter of their life has lived up to expectations.
While many are living the life they want, including travelling and taking up new hobbies, a significant proportion are spending more than they planned.
41% of respondents said they have ended up needing more money than they anticipated, and 1 in 5 said it was “significantly more” than they calculated. Miscalculating the income needed is higher among those who retire in their 50s.
Underestimating how much you need in retirement could mean your lifestyle falls short of your expectations. It might also mean you’re at risk of spending too much too soon, which could lead to you facing challenges in your later years.
With money worries cited as the biggest fear when approaching retirement, taking control might mean you can retire with confidence.
5 useful steps that could secure your retirement
1. Review your pension now
It’s never too soon to start planning for retirement. Even if stepping away from work is decades away, checking your pension now could put you on the path to financial security later in life.
Understanding the current value of your pension and how it’s projected to grow during your working life could help you assess if you’re on the right track. Identifying gaps sooner may mean you have more opportunities to plug them.
2. Set out when you’d like to retire
The value of your pension alone won’t help you understand if you’re saving enough. You also need to consider how long you’ll be using your pension to create an income. Setting out your planned retirement date is an important step.
3. Understand the potential cost of your retirement lifestyle
What income do you need to live the lifestyle you want?
Your lifestyle will have a direct effect on your pension goal and your long-term financial security. While things may change in the future, thinking about how you want to spend your time in retirement and the potential day-to-day costs can be valuable.
Remember, inflation means the cost of living is likely to increase during your retirement. So, if your income remains static, it could be difficult to maintain your lifestyle. As a result, you might want to plan for an income that increases throughout retirement.
4. Consider how to prepare for the unexpected
Financial shocks can have a long-lasting effect on your finances if you aren’t prepared, including when you retire.
Making a financial safety net part of your retirement plan might help ensure you’re financially secure throughout your life.
5. Contact a financial planner
A financial planner can help you create a retirement plan that’s right for you. If your dream is to be financially secure when you give up work, please contact us. We’ll work with you to set out pension goals, establish the steps you might want to take, and give you confidence in the future.
Taking control now could mean you’re more likely to reach your retirement goals, including long-term financial security.
Please contact us to arrange a meeting to talk about your retirement dreams.
Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.
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.