Placeholder guide drafted for launch. Andrew to review, edit and approve before it goes live.
When the State Pension was introduced, retirement was expected to be fairly short. Today it’s not unusual for it to last twenty or thirty years. That’s good news, but it changes the maths. Your savings now have to stretch across a much longer stretch of life, without a salary coming in.
The gap between hope and reality
Research from the Standard Life Centre for the Future of Retirement found a five-year gap between the age people would like to retire (62) and the age they think they’ll actually be able to (67). Half of workers now expect to keep working past State Pension age.1
That gap is usually about confidence as much as money. If you don’t know whether your pension will last, it feels safer to keep working. A clear plan won’t change the markets, but it can tell you what’s realistic and what has to happen to get there.
Retirement comes in phases
It helps to stop thinking of retirement as one long, flat period. For most people it looks more like three:
- The active years. Travel, hobbies, helping family. Spending is often higher than people expect.
- The settled years. Life slows down and day-to-day spending tends to ease off.
- Later life. Health and care costs can become more significant, and planning for them early gives you more choice.
Each phase needs something different from your money, so a good plan shapes your income around them rather than assuming the same figure every year until you’re 100.
What a longer retirement asks of your plan
Your money needs to keep growing. Over twenty or thirty years, inflation can quietly erode the value of cash. That usually means keeping at least part of your pension invested well into retirement.
Withdrawals need to be sustainable. Take too much early on, especially after a market fall, and the pot may not recover. Take too little and you may live more frugally than you need to.
Timing matters. The State Pension age is rising to 67 over the next couple of years, and the minimum age for accessing private pensions is due to rise from 55 to 57 in 2028. When you can access each source of income affects how you bridge the gap.
Where to start
Begin with what you want your retirement to look like, then work backwards. What do you need to cover the essentials? What would you like for the things that make life enjoyable? From there it becomes much easier to see whether your current savings, pensions and State Pension are on track, and what to do if they’re not.
If you’d like to talk it through, book a conversation with us.
1. Standard Life Centre for the Future of Retirement, Retirement Voice.
This guide is for general information only and does not constitute personal financial advice. The value of investments can fall as well as rise and you may get back less than you invested. Tax rules can change and their effect depends on your individual circumstances.