February 10, 2023
Retirement is a milestone that’s often greeted with celebration but what do you need to do to be happy during your later years? Research has revealed that it is experiences, rather than material items, that are important.
A survey from Royal London found that 72% of those aged over 55 favoured experiences over material possessions. From seeing more of the world to trying a hobby you’ve always wanted to do, retirement offers an opportunity to create the life you want. It’s not just the big-ticket experiences that those approaching retirement believe are important either. Many are looking forward to spending more time with loved ones. When asked about their life goals, retirees are focusing on creating lasting memories. The most important goals were:
The research found that 17% of those nearing retirement are worried about a lack of experiences, and the same proportion said a lack of purpose was a concern. While worries are normal when you approach a big life event, setting out a plan now can help you realise your goals.
Gary Beyer, protection product lead at Royal London, said: “It is clear to see that those aged 55 and over value experiences more than anything else, including material possessions. Being able to lead an active, healthy lifestyle, try new things, and travel to new places, combined with spending more time with family is the key to retirement happiness.”
Many people approaching retirement are focused on experiences that will create lifelong memories. However, the research also found that finances could mean retirement doesn’t live up to expectations.
Among over-55s that have yet to achieve their life goals, 40% said money was the biggest barrier. The cost of living crisis is further exacerbating financial challenges for those planning their retirement. 3 in 10 over-55s said they are changing their plans as a result.
If you’re looking forward to a retirement that’s filled with experiences that will make you happy, financial planning is crucial. It can give you confidence about your long-term finances, so you can focus on what’s really important. Calculating if you’re on track to have enough to reach your retirement goals can be broken down into two key questions:
Having a target retirement income in mind is essential for understanding if you’re saving enough. Many retirees find that their income needs fall when they stop working. You may have finished paying off your mortgage or no longer need to budget for commuting.
Research from Which? suggests a couple needs an annual income of £28,000 to live comfortably. While this figure is a useful starting point, keep in mind living expenses can vary significantly. You should review your expected outgoings to create a goal that’s tailored to you. Remember, your income needs may change throughout retirement and could be affected by outside factors, like inflation.
With an annual goal in mind, you can then start looking at if you’re saving enough for retirement. How much do you already have in your pension? What contributions are you making? And are there other assets you plan to use, such as savings?
Bringing together all the information you need to understand if you’re on track can be difficult. As financial planners, we’re here to help. We can help you understand how the value of your assets may change between now and retirement, and how you can use them to create an income. If there is a gap in your savings, we’ll work with you to create a plan to get you back on track.
Please contact us to talk about what your retirement goals are and the steps you can take to reach them.
Please note: The fund value may fluctuate and can go down as well as up and your pension fund may not be as much as you invested which will have an impact on the level of benefits available. Past performance is not a reliable indicator of future results..
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future results. The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.