The 3 Stages to Successful Retirement Planning

One of the comments that a lot of clients make when we start working together on their retirement plan is, ‘we wish we’d started this sooner’. Too often our busy work schedule and family commitments means that we put off planning for our retirement until the last minute.

There are three key stages that I think clients should go through as part of a successful retirement strategy.

Stage #1 – Planning

This is the vital first step and this is where you can begin to address some of the big questions such as:

What does retirement look like?
What is my purpose in retirement?
How much will retirement cost?
Will I have enough money?

A good financial plan will provide a cash flow summary and model a number of different scenarios to help determine whether you will remain financially comfortable for the rest of your life.

Articulating your desired lifestyle in retirement can be difficult without sufficient time for reflection and adjustment and this is why starting the planning process early is so important. It also means that, if there is a shortfall in the amount you have accumulated so far, you can put in place a strategy to address this. The financial plan can also establish whether you can retire earlier or later than anticipated.

Stage #2 – Implementation

This stage is where the practical steps are taken as you progress towards your retirement. For example, if you have several pensions built up over the course of your working life, you might look to consolidate these into a single plan.

You may have pensions with includes features such as a Guaranteed Annuity Rate or you might have deferred benefits from an Occupational Pension Scheme. Obtaining the details of these schemes means that they can be incorporated into your financial plan. So often, clients remember they have accrued pensions from early in their working life after they have retired!

It is also important to put in place a strategy for your non-pension assets and to determine how these fit in with the overall financial plan. For example, can ISAs be used to provide a tax-free income in retirement or for capital withdrawals? You may have a Buy-to-Let property and are questioning whether you really want the hassle of managing this in later life.

Stage #3 – Execution & Review

The first two stages of the retirement planning process will provide you with the peace of mind that you are in control when you decide to retire, whether that be by way of a gradual transition into retirement or by giving up paid employment completely. During the planning stage you may have modelled different scenarios and so you are now in a better position to understand the financial implications of your retirement decisions.

Once you are in retirement (whatever that may look like), it is important to review your financial position and the financial planning strategy and make adjustments accordingly. For example, are you spending more or less than anticipated? Are there new goals to factor in? Have your circumstances changed or have investment markets fallen?

The Sooner the Better!

The sooner you start planning for your retirement the more in control you will feel. I would argue that anyone over the age of 50 should start working with a financial planner. You probably won’t have all the answers as to what retirement might look like, but you should be able to start building up a picture of the level of income you might be on course to receive in retirement based on sensible assumptions. You can then agree an action plan to help you move towards your retirement goals.

A Journey Not a Destination

Increasingly, retirement is not seen as a destination but simply a milestone on life’s journey. For most people, gone are the days when they were in the office on a Friday and in their pipe and slippers on the Monday with a guaranteed pension from a Defined Benefit Scheme.

Retirement is now much more nuanced with people looking to continue working in some capacity, returning to education, volunteering and taking a ‘golden’ gap year. Financial planning is therefore vital in helping you live your ideal lifestyle for the rest of your life.

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If you would like to start planning for your retirement, please do contact us using the button below to book a meeting.