More than half of people in the UK either aren’t saving at all for their retirement, or they aren’t saving nearly enough to give them the standard of living they hope for when they retire.

If you fall into this category, you have three choices. You can:

  1. Adjust downwards your expectations of what you’ll be able to afford in retirement,
  2. Start saving more,
  3. Retire later.

Don’t rely on the State Pension to keep you going in retirement. The maximum basic State Pension of £115.95 (tax year 2015-16) a week is far below what most people say they hope to retire on.

When Should You Start Planning For Your Retirement?

Planning your retirement seems boring. But whether your retirement is five years away or fifty, it’s never too early to start planning for your golden years, and it doesn’t have to be a tedious, painstaking process.

Numerous financial tools can help you do everything from calculating how much money you’ll need when you retire, to finding the best investment mix and making sure you’re saving enough now. Follow these steps and get your comprehensive plan started (the sooner the better, so your money can grow!).

Not started yet?

Regardless of why, it’s not too late to take a hard look at your financesdevise a plan, and get some money in the bank. Here’s a step-by-step guide to whipping your retirement savings into shape…

To create a retirement plan that will guide you going forward, you’ll need four key numbers:

  1. The age at which you want to retire
  2. The number of years you’ll depend on your retirement savings
  3. An annual estimate of living expenses in retirement
  4. Your current savings.

While many people think of 65 as the “normal” retirement age, it’s not a definitive age. As people live longer, some choose to work into their late 60s and beyond. By taking into account your age, salary, expenses and how long you’re likely to live, you can figure out what age is a realistic retirement target.

Remember to consider any potential income you might have in retirement. Will you have a pension, or will you depend on the State Pension? To calculate your State Pension go to if you are over 55 to request a State Pension statement, or if you’re younger to to calculate an estimate of your state pension.

Now run your numbers through the Age UK’s Pension Calculator. You’ll need your age, income and lifestyle details, and the calculator will show your estimated retirement income and projected living expenses – as well as any gap between the two.

Adjusting your retirement assumptions helps show how you can plan your funding for retirement.

How Much Will Your Need To Retire?

It’s surprising how many people don’t actually think about how much they’ll need for a “comfortable” retirement. Whilst we must all acknowledge that we’re going to be receiving less in terms of income, comfort is probably going to be linked to the lifestyle to which you’ve become accustomed.

Think about what you might need/want as a proportion of your salary and think about your current bills as well (and what they might be in 30 years – hopefully you won’t have that mortgage, but your energy consumption is likely to be higher and you have a lot of leisure time to fill!).

Draw up a list of what you expenses might be, and consider where you might be living – has it always been the intention to downsize the family home after the kids have flown the nest? As well as freeing up some extra money (we’ll talk about this more later), a smaller home doesn’t cost nearly as much to run.

Once you have a rough figure based on today’s prices and your income, you have an income goal to aim for.

When Do You Plan To Retire?

It might have always been your intention to retire when the state pension kicks in, but you don’t have to retire at this point – and you don’t have to take your state pension straightaway either.

Legislation means that your employer can’t terminate your contract when you reach state retirement age, leaving you free to continue in your job for as long as you like (subject to your health and ability to do the job in question). That means you don’t have to take any income from your pension and you can carry on building your retirement pot for longer as well.

Retiring later means you can maintain your quality of life for longer and could allow for a greater income when you finally do retire (if you chose an annuity when you retire it may provide you with a higher income as you’ll have more in your pot to convert), and if you use another method to take your pension income you may choose to take more each year.

As previously mentioned, you can also defer when you start to receive the state pension. When you finally do take your state pension you can either receive this money as a lump sum, or as an additional amount on top of your regular state pension payment.

Next week I will be exploring how to assess and trim your living expenses for a comfortable but affordable retirement.

If you have any questions about any of the information above please do not hesitate to get in contact. Either leave a comment below or contact me directly: call 01252 713 645 or email