Plan your route to retirement
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As retirement nears, many people underestimate the amount of capital needed to maintain their desired lifestyle. Changes in pension legislation, prolonged low interest rates, reduced employer pension contributions, high inflation, and increased life expectancy have all contributed to this challenge.
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How can you be sure you’ve made the right provisions, and when will you be able to retire?
Many factors influence the size of the “retirement pot” needed. Everyone has different expenses, aspirations, and expectations. Ensuring you can afford your desired lifestyle after work is crucial. While the amount of money needed might seem daunting, being aware of potential problems and planning accordingly can help keep your plans on track. Generally, the earlier you start saving for retirement, the more you may have available.
State Pension entitlement and automatic pension enrolment should help you achieve a basic standard of living. The full State Pension from April 2025 is £11,973 per year, a 4.1 per cent increase on the previous year. However, this amount is insufficient for most people, and additional wealth is essential to a comfortable lifestyle in retirement.
The first thing to do is realise that, even if you have yet to set out a plan for your later years, there is nothing to prevent you from starting – and it’s not as overwhelming as it might seem.
Starting with simple questions will get the ball rolling, and your plan can then take shape.
Thinking about where you are now and where you want to be means you can then prepare a plan that helps you achieve your goals.
Importantly, understanding your past relationship with money is valuable, as building wealth for the medium to long-term needs awareness and discipline – and the older you will undoubtedly thank you for doing so a few years down the line.
If you are unsure where to start or lack time, professional advice could help bring your finances to life and provide peace of mind that the plan in your mind is achievable – or you can manage your own expectations about how much to save, how to structure your wealth, and when you can realistically think about slowing down.
So, the first step towards planning for retirement ought to be taking stock of the current expected level of capital available and the anticipated level of expenses that will need to be paid.
Following this, a plan needs to be drawn up to determine whether these goals are achievable and how best to reach them.
Working with a financial planner can make this process less painful and more efficient. Expert advice can help you focus on the most important factors and develop the most effective way to structure your investments with this goal in mind.
One important thing to consider is how your retirement plan is progressing and what changes are needed to keep you on track – as even the best-laid plans can fail. We routinely face changes within government and legislation, a shift in the economic lifecycle, and changes in your own circumstances – your plan needs to keep up.
Drew Nutsford is a director and chartered financial planner at Waverton Wealth.
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This article does not constitute advice, and a full assessment would need to be completed by one of our specialist advisers to understand an individual’s circumstances. Please remember that the value of investments can fluctuate, and you may get back less than you invested. Past performance is not necessarily an indicator of future returns. Waverton Wealth Planning LLP is authorised and regulated by the Financial Conduct Authority (FCA).