Retirement is the biggest financial decision almost all of us will face in our lifetime. 

Why do I say retirement is your biggest decision? Because when you retire, you are choosing to stop the income that you have lived off for the last three or four decades and rely upon what you have saved during that time. And good financial planning can help you plan for this decision and take some control over when you retire.  

Now, three or four decades is a long time and if you get it wrong, that is a long time to endure any mistakes.  

One of the most valuable things a financial planner can do is be the barrier between a client and a costly misjudgement. So I find it surprising that according to a survey of 1,000 people aged between 55 and 75, conducted by Find Out Now in February 2022, that 60% of retirees don’t take advice at such a crucial point in life; getting the big decisions right and speaking with an expert is the prudent approach.  

Here are seven steps to help you with retiring successfully:

1. Consider when will you retire? 

If you don’t have a goal of when you want to retire, how can you plan to achieve it and how will you know when you’re there?  

Decide when you will aim to retire. Is it 55, 60, state pension age? It doesn’t have to be set in stone and of course it can be flexible, but you need to start with this. 

2. Consider what does your ideal retirement look like? 

You know when you want to retire, so what are you going to do with all this free time? And what is it going to cost? 

Determine what kind of lifestyle you want in retirement. Whether it's traveling, pursuing hobbies, or spending more time with family, your goals will influence your financial needs. 

Are there going to be any significant changes in retirement that you need to account for? Will you be moving home, or renovating? Will you need to buy a car, have kid’s weddings and house purchases to support? 

Make a list of all the things you want to do, all the things you would like to do and all the things that will be important for you to be able to support your family with.  

Make a note of costs and when these costs will arise. 

3. Consider what you spend  

The word ‘budget’ doesn’t exactly scream fun, but don’t let it ruin your dream retirement. Doing a budgeting exercise isn’t about cutting down your spending, it’s about understanding what your day-to-day expenditure looks like, so you can make sure you continue to live the life you are used to.  

Identify your: 

• Base line expenditure (what can’t you live without?)  
• Discretionary expenditure (what would you like to do?) 
• Luxury expenditure (what is the cherry on top?)  

So lets recap; we have a finish line, we know what we want retirement to look like, we know how much it’s going to cost, so how do we make it happen? 

4. Consider your finances 

This is about making sure you are in a good position. Take account of your existing savings, pensions, ISAs, investments, and any other assets.  

Key considerations: 

• What will they be worth at retirement? 
• How can I use them at retirement (income, lump sums) 
• Will I be taxed on them? 
• How much do I need to take out each year? 
• Are they invested in the right place for my goals? 
• Will they run out in my lifetime? 
• An important consideration is the State Pension, get a forecast (here) and ask the question could it be improved? 

Once you have considered these questions you can identify shortfalls and how to make up for them.   

5. Consider your shortfalls 

Once you know your shortfalls, that’s when you can start to fix them. Save efficiently, pay into pensions, use your ISA allowances, whatever the solution it will be specific to your situation. My top-tip is to always use your tax allowances, where possible.   

If you are married or in a civil partnership, consider who is best to hold the assets you have.  

If one of you is a non-taxpayer and the other is an additional taxpayer, savings income will be more efficient held in the non-taxpayers name, for example.  

Then review, review, review. Life didn’t standstill in the past and it won’t in the future so make sure you’re in the know to make the most of any opportunity.  

6. Consider how it might impact on you.  

Not everyone looks forward to retirement and that is okay. Work can be a huge part of your life and taking time to plan how you will spend your retirement and adjusting to what life will look like is as important as getting the money right.  

If you find retirement intimidating, consider what it is you would choose to do. You might be joining groups, taking up new hobbies, spending time with friends and family or simply enjoying reading a book in the garden. But just like building a plan for your finances, build a plan for your time and yes, it can be flexible.  

7. Consider what else 

Life has a funny way of throwing us a curveball, so make sure your plans have flexibility to deal with short term change. Whether that is health, family, markets or something out of the blue, it is key to consider what if, and how do you plan to deal with it?  

How Can a Financial Planner help? 

We can help you consider your goals, understand what you have and what you are likely to have and whether this is likely to be enough. Improve your plan by making the sensible decisions for your circumstances at the right time allowing you to understand where you are, where you are going and when you are going to get to your destination.  

Next steps 

Hopefully this has helped you with thinking about retirement, at Johnston Carmichael Wealth our planners will happily have a call or meeting to discuss your plans with no obligation to take advice, so if you are thinking about retirement how about you consider having us support you with your journey that could span the next three or four decades.  

If you would like to discuss, contact me or one of the team, or complete the website enquiry form below and we will be in touch.  

Disclaimer 

Johnston Carmichael Wealth Limited is authorised and regulated by the Financial Conduct Authority. 

Please note: This communication should not be read as financial advice. While all possible care is taken in the completion of this article, no responsibility for loss occasioned by any person acting or refraining from action as a result of the information contained herein can be accepted by this firm.