Planning for retirement, how do I do that?

It’s rare that a week goes by without some story in the media around stock markets, how they are doing, and how they are linked to our pension pots. One of the more recent ones related to the drop in the US stock market and how that can affect the rest of the world, the UK included. The recent collapse of Carillion with a large pension deficit also raises concerns around whether or not our pensions are secure. And always prominent in the news are reports around whether or not we are saving enough for retirement. More and more young people don’t have any retirement plans and don’t intend to make any given they are living hand-to-mouth when they start out and workplace pensions are meagre at best. Which raises an important question: should we still be planning for retirement and what is the best way to do that? We try to find some answers for you in this month’s article.

First things first

While it’s never too late to start planning for retirement, the sooner you start the better. There is no magic number around what we will each need to be comfortable in our retirement years. The best place to start in calculating this is to ask yourself a series of questions:

  1. At what age would you like to retire?
  2. What income would you like to have each month (or you can calculate it annually if easier). A general rule is that you will need around 80% of your annual income.
  3. What savings and investments do you have?
  4. Do you have a company or personal pension pot? You may have several if you have moved around during your working life.
  5. Check with HMRC to see what your projected state pension is.

The next steps

Armed with answers to these questions, you can start to think about the best way of saving for your retirement. Things to consider, include:

  1. If you found that you have more than one pension pot then it may be worth considering seeking advice on whether it is better to combine them into a single pension. If they are not being actively managed or are not performing all that well, you may be better off putting them together.
  2. Can you pay more into your pension right now? If not, is it an option to push back your retirement age? Realistically, you can only make this decision when you are closer to that time, so don’t rely too heavily on that if you are not there yet.
  3. Can you take a higher risk with your investments now or are you too close to retirement, in which case it is more prudent to reduce your risk?
  4. What outstanding debts do you have? These could include your mortgage, any loans, or credit card bills. Pay off as much of that as you can so that you are not tempted to use your pension to do that; once it’s gone, it’s gone!

For advice on the best way to plan for your retirement our experts at Hammonds Accountants can help. Talk to us on 020 8249 6328 or get in touch via email at and we can help you plan for retirement whenever you are ready.