Retiring is one of the biggest life events that a person will experience and often involves changing the habits of a lifetime, from saving regularly, to thinking about how to spend the money you’ve saved so that it gives you the best possible retirement.
Research from investment company Aberdeen Investments found more than half of UK adults aged over 40 are anxious about retiring. ‘Retirement anxiety’ is increasing due to financial pressures including the cost of living on income and savings. The two outcomes we find most people are concerned about are:
- “I don’t have enough money to enjoy my life and feel that the pot could run out”.
- “I have too much money and wish I had spent more in the early years or retired sooner”.
Is now the right time to retire?
Whilst many of us immediately think about whether we’ll have enough money to last us in retirement, it’s equally important to think about how retiring is going to impact your and your family’s lives personally.
Retirement decisions are often influenced by personal, financial, and health-related factors. Based on research by the Institute of Fiscal Studies, here are some of the reasons affecting when people retire:
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The key is having a clear financial plan
A financial plan brings everything together. It helps you understand what you have, what you might need, and what choices you have based on your personal circumstances.
- Take stock – Start by pulling together your key financial information (for example, pensions, savings, investments, debts and household spending). Your Aegon Financial Planning Manager can guide you on what to gather, if needed.
- Picture your future – What lifestyle do you want in retirement? The Pensions and Lifetime Savings Association has developed a set of general standards showing what life in retirement may look like at three different expenditure levels, Visit retirementlivingstandards.org.uk.
- Plan your retirement income – What will your savings and other assets generate in retirement? For this it’s important that you review both guaranteed and non-guaranteed income sources.
Examples of guaranteed income sources | Examples of non-guaranteed income sources |
Defined benefit pension State Pension Annuity | Defined contribution pension Cash and investment income Other income, e.g. rental, inheritance, business sale |
- Guaranteed income is the foundation of your financial plan. Once your guaranteed income sources are known, you can identify any shortfall between income and expenditure and decide how this may be supplemented.
- Non-guaranteed income provides a more flexible income. But it’s important to think about what level of risk you are comfortable with, as the value of investments can go down as well as up so you may end up with less than you started with. Taking money out too early could result in you running out.
From April 2027, the government plans to include most unused pension savings in a person’s estate for Inheritance Tax purposes.
This is a change from the current rules and won’t affect everyone. How it applies will depend on your circumstances, who you leave money to, and future tax rules.
When planning how and when to use your pension in retirement, it’s worth being aware of this change and discussing it with your Financial Planning Manager as part of your wider retirement plan.
- Create a budget – understanding your income and expenses is crucial for managing your finances effectively and ensuring you have enough to live on comfortably.
- Take financial advice
Planning for retirement can feel overwhelming. At Aegon Financial Planning, we take time to understand your current situation and your retirement goals. We can help you build a personalised plan, so you can make decisions with more clarity and confidence about the income you’ll have in retirement.
Some retirement options are also a ‘one-off’ decision, therefore always seek financial advice about the best retirement income options for you, based on your individual circumstances.
Did you know: ‘77% people who see their adviser regularly say they’re financially better off because of the advice they’ve received.’ Standard Life 2024 Retirement Voice Survey of 6,000 UK adults. |
We’re here to help
If you’d like some help with your retirement planning, or to chat through the investments you hold with Aegon Financial Planning, contact your Financial Planning Manager, call us on 0800 464 3079*, or request an appointment using the button below.
* Call charges vary. Lines are open Monday to Friday between 8.30am and 5.30pm. All calls are recorded for business purposes. Afp244. Exp 02/27
Market Commentary – Quarter 4, 2025