Retiring or Scaling Back at Work: Will Your Pension and Investments Last?

As you approach retirement or consider reducing your working hours, one key question always arises: will I have enough money to maintain my lifestyle throughout my later years? Ensuring your pensions and investments are sufficient is essential for financial security and for your peace of mind.

Understanding Retirement Costs

According to research by PLSA Retirement Living Standards, a single person in the UK would need £43,100¹ per year to enjoy a ‘comfortable’ retirement. For a couple, this rises to £59,000 per year. These figures account for essentials such as housing, food, utilities, and a ‘comfortable’ level of discretionary spending on holidays and leisure activities – perhaps a two-week holiday in Europe, eating out a few times a month, running a small car and enjoying some luxuries such as regular beauty treatments or theatre trips. Of course, all retirement costs are relative.

With increasing life expectancy and potential care costs in later years, it’s important to ensure your savings and investments will sustain you for potentially 20 to 30 years of retirement, maybe longer.

Reviewing Your Pension and Investments

A good starting point is to assess your current pensions and investments:

• Workplace and Private Pensions – Review your pension statements to understand how much you have saved and how your funds are performing.
• State Pension – Check your National Insurance record to see what you’re entitled to and at what age you can claim it.
• Investments and Savings – Consider ISAs, stocks and shares, and any additional savings you may have.

Speaking with a Financial Adviser, such as those at Stringer Mann Chartered Financial Planners, can help you determine if your current savings trajectory aligns with your retirement goals.

Creating a Sustainable Income Plan

Once you have a clear picture of your finances, you’ll need a plan to ensure your income lasts throughout your retirement. Key considerations will include:

• Withdrawal Strategy – Deciding how much to withdraw from your pension and investments each year while ensuring sustainability.
• Tax Efficiency – Structuring withdrawals in a way that minimises tax liability and maximises available allowances.
• Investment Adjustments – Reviewing your portfolio to balance risk and returns as you move into retirement.
• Managing Unexpected Costs - It’s crucial to factor in unforeseen expenses such as healthcare, home adaptations, or support for family members, so having a contingency fund or suitable insurance can help provide extra security.

The Importance of Ongoing Review

Financial planning doesn’t stop at retirement. Regularly reviewing your income, spending, and investment performance ensures you remain on track. As circumstances change, adjustments may be needed to maintain financial stability.

Whether you plan to retire fully or gradually reduce your workload, taking proactive steps today can help you achieve a financially secure future. Seeking professional financial advice can provide clarity and confidence in your retirement planning.

If you’d like to discuss your retirement options and ensure your pension and investments are on track, please get in touch today.

The value of an investment with St. James's Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.

The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief is generally dependent on individual circumstances.

¹Latest Retirement Living Standards Show Change of UK Public Expectations, PLSA Retirement Living Standards, 7 February 2024

Further Reading

Additional articles in this series include:

• How much money do I need to see a Financial Adviser?
• Starting Work: Kickstart Your Financial Future
• Taking a Joint Approach to Finances
• Navigating the Home-Buying Journey
• Planning Financially for Parenthood
• Planning for the Unexpected
• Rebuilding your Finances after Divorce or Separation