Almost a third of people in the UK admit to not having a plan for their finances in retirement, making them four times more likely to feel stressed about their long-term finances compared to those with well-developed plans, according to Aegon.
According to its latest research from its ‘Second 50’ campaign, over half or 57 per cent of those without plans are concerned about running out of money in retirement, more than double the proportion of people with a financial plan, which stands at 22 per cent.
Aegon, head of pensions, Kate Smith, shares her top five tips for making a retirement plan to help you boost your financial preparedness and wellbeing.
Her five tips for writing a financial plan for retirement include knowing what you have, speaking to anyone you share finances with, and knowing what you’re entitled to in terms of the state pension.
She says: “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.”
She says to consider what you need, noting, “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.”
Smith also says to think about what makes you happy and that 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.”
She adds: “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.”
Smith says to write it all down noting research which says that people who formalise their plans are significantly more likely to achieve their goals than those who don’t.
Finally she advises people to review their plans regularly saying, “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.”
Smith adds: “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.”
