Wealth of Advice, Swale House, Mandale Business Park, Durham, DH1 1TH
Retirement planning might seem daunting, but it’s actually quite simple at its core: it's all about preparing for the lifestyle you want after you stop working. Whether you're dreaming of early retirement or planning to work until the traditional retirement age, your plan is unique to you.
A retirement plan is essentially your financial roadmap for life after work. It’s about figuring out how much money you'll need on a monthly and annual basis when you're no longer earning a salary. During your working years, you’re in the "accumulation" phase—you're saving and investing, growing your wealth over time. But once you retire, you enter the "decumulation" phase, where you'll start withdrawing from the savings and investments you've built up.
A good way to picture this in your mind is thinking of your retirement savings as a mountain. Retirement is your goal at the top of the mountain, and your funds go up as you hike towards your goal. Once you reach your goal at the top of the mountain, your funds then start to go down as you start your descent.
Retirement today looks very different than it did 20 or 30 years ago. Many people are now opting for a phased retirement, where they gradually reduce their work hours, switch careers, or even become self-employed. Others dream of retiring in their mid-50s, well before the traditional retirement age.
No matter when you choose to retire, the key question remains: how much money will you need to live comfortably? This is where personalised planning becomes crucial. Your retirement plan should reflect your individual needs, lifestyle, and financial goals. Discussing this with a financial planner can be a great way to get some perspective and work out what is achievable with your retirement savings.
Starting your retirement planning early is always a good idea, even if your future seems uncertain. Life is full of unexpected events—getting married, having children, paying off a mortgage, changing jobs, or even moving abroad. All of these can impact how much you can save and invest for retirement. The earlier you start planning, the better equipped you'll be to handle these changes.
When creating a retirement plan, there are several factors to consider:
Consider a recent client we chatted to who wanted to retire early at 55. After reviewing their savings, we found that while they had done well, increasing their pension contributions for the next few years would put them on track to meet their goal. By focusing on additional savings over the next few, they were able to stay on track for their desired retirement age.
Another client, just two years away from retirement, was advised to maximise their pension contributions. This strategy significantly boosted their pension pot, thanks to tax relief benefits. Because they were a higher-rate taxpayer, the tax relief made this an especially efficient way to save.
A common misconception is that the state won’t provide any financial support in retirement. However, the state pension is still a vital part of retirement income for many. As of now, if you've contributed for 35 years, you’re entitled to a state pension, which is set to rise with inflation.
Additionally, joining a workplace pension is a no-brainer for most employees. It’s essentially free money - your employer is legally required to contribute to your pension, and you also receive tax relief on your contributions. Over time, these contributions can add up significantly.
Retirement planning doesn’t have to be complicated. Whether you're planning to retire early or work until the state pension age, the key is to start planning as early as possible and to tailor your plan to your specific needs and goals. Remember, your retirement plan is a reflection of the life you want to lead after you stop working—make sure it’s a plan that works for you.
If you want help in building that plan, our Chartered Financial Planners specialise in doing just that. We’ve got over 600 happy clients who we’ve helped to retire, and we act as their ongoing partner throughout their retirement journey so they’re always on the right track.
Give us a call on 0191 384 1008 or email us at enquiries@wealthofadvice.co.uk to book in an initial consultation at our expense.
If you want a better view of what your future could be, we'll have a chat over a cup of coffee in our Durham office and work out if we can add any value to your financial picture.
Wealth of Advice are authorised and regulated by the Financial Conduct Authority, reference number 563909. This website is for information purposes only and is not personal advice.
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