Taking a few essential retirement planning steps now could make the difference between financial security and future uncertainty; yet, research shows that around 42% of UK adults have no pension savings at all — a startling figure from the Financial Conduct Authority’s Financial Lives survey.¹

Our team at EveryInvestor has created this guide to help you navigate the key stages of retirement planning and avoid common pitfalls.

We are committed to providing accurate, relevant insights, and this article is intended to be an information aid only. Always consult a professional financial adviser before making any retirement planning decisions

Discover how smart retirement planning can help you build a more secure financial future...

What Is Retirement & How Is It Funded?

Retirement is the phase of life when a person stops working full-time, usually after reaching a certain age or financial milestone, and it's typically funded or supported by a mix of income sources such as pensions, personal savings, and state benefits.

This allows individuals to focus on hobbies, travel, or family without the pressures of employment.

What Are the Key Retirement Planning Steps for Over-55s in the UK?

For UK residents over 55, the key steps to retirement planning should begin with a full review of your pensions, savings, and investments—understand your expected income and compare it against how much you might need and projected living costs, including essentials, leisure, and possible care expenses.

Next, think about where you want to live—staying put, downsizing, or relocating all come with different financial implications.

Finally, put estate planning in place by writing a will, assessing inheritance tax, and setting up power of attorney; the goal is to create a retirement that supports both security and quality of life.

What Should Be on Your Retirement Planning Checklist for Financial Security?

A solid retirement planning checklist should cover your financial goals, income needs, and the status of your pensions and investments.

Some items you should include in your checklist include:

• Setting clear retirement objectives
• Estimating how much money you’ll need annually
• Assess your pension pots, savings, investments, and any other assets
• Consulting a financial adviser or seeking professional advice

While these are the basics, deeper research will reveal more checklist items to help you confidently prepare for a secure and fulfilling retirement.

What Are the Top 5 Tips for Planning a Successful Retirement?

To plan a successful retirement, start by setting clear, achievable goals, determine your financial needs, explore all income sources, create a detailed retirement plan that includes budgeting and estate planning, and seek professional advice.

These 5 steps form a strong foundation for a comfortable and secure retirement.

Take a closer look at these key 5 steps:

Step 1: Set Clear Retirement Goals

The first step in planning a successful retirement is to set clear, personal goals,as defining these objectives early helps you shape a realistic, personalised financial strategy.

Think about when you want to retire, the lifestyle you hope to maintain, and any specific plans—such as travel, hobbies, or family support.

Here's what you need to consider:

What Is a Comprehensive Retirement Strategy?

A comprehensive retirement strategy helps you align your goals with a realistic financial plan by separating your future spending into essential and non-essential categories; essentials cover core living costs like housing and food, while non-essentials include travel and leisure.²

This structure allows you to balance financial security with lifestyle aspirations, while assessing both opportunities and risks along the way.

How Can a Budget Planner Help With Retirement Planning?

Using a budget planner for retirement helps you track income, spot unnecessary spending, and set realistic financial goals.

Whether it's an online tool or a simple spreadsheet, reviewing past bank statements and categorising essential and non-essential expenses provides a solid foundation for building a sustainable retirement budget.

Be SMART

According to advisors and commentators, employing what is known as the SMART strategy can also be a good place to start.²

How this approach works...

• Security: Thinking about security in retirement is about identifying and managing risk. What would you do, for instance, if you became ill and required ongoing care?
• Management: Speak to a financial advisor when you start planning for retirement. If you would prefer the DIY approach initially, think about simplifying your finances by consolidating bank and investment accounts so your portfolio is easier to manage. 
• Activity: Something that is often overlooked is how you are going to remain active after retirement. Will you be pursuing hobbies? Travelling? Depending on your plans, you may need to budget for the activities you would like to prioritise. 
• Realism: It is incredibly important to be realistic at this stage of your planning. What kind of retirement lifestyle can you anticipate? Would it make sense to delay retirement by a few years to build up more of a pension, or to keep working part-time?
• Transitioning: Moving from one stage of life to another is, in a sense, the crux of entering retirement. Use this planning step to help you think about your will, your beneficiaries, and whether you should contact an estate planning expert. 

While employing this SMART strategy, it is crucial to continue educating yourself on the benefits of different retirement approaches and to keep abreast of developments such as changes to pension rules and rates adjustments that could affect your planning. 

Remember...

Whichever strategy you use, it is very important to factor in inflation and account for any large, one-time expenses, such as repaying a mortgage, starting a business, or funding a child's education. 

In addition, consider any potential risks, such as health issues or economic downturns, and ensure your goals are flexible enough to adapt to changing circumstances. 

Regularly reviewing and updating your goals is vital to ensure they remain aligned with your current situation and future expectations, ultimately leading to a comfortable and secure retirement.

Step 2: Determine Your Retirement Income Needs

To determine your retirement income needs, first estimate your life expectancy and the number of years you expect to be in retirement. 

Then, multiply your desired annual income by the number of years in retirement, adjusting for inflation. 

How Much Income Do You Need in Retirement?

How much income you need in retirement will depend on your desired lifestyle, living expenses, and any unexpected costs that may arise. 

A general guideline is to aim for a retirement income of about 70% of your pre-retirement salary³, but individual circumstances may vary. 

Consider factors such as housing costs, healthcare, travel, and leisure activities to estimate your ideal retirement income.

When Will You Retire?

Deciding when to retire is a personal choice that depends on factors such as your financial situation, health, and lifestyle preferences. 

Some people may want to retire as soon as possible to start travelling and spend more time with their family, while others may prefer to work for longer because they enjoy their career.

Step 3: Assess Your Financial Situation and Income Options

Assessing your financial situation and income options involves reviewing your current savings, investments, and pension contributions. 

Consider all income sources, such as State Pension, workplace pensions, personal pensions, and investments. 

The UK government’s Money Advice Service, MoneyHelper, provides a useful pension calculator that takes into account your current pension contributions, age, and retirement goals to estimate your pension income.

If your savings and pension will not meet your retirement income needs, explore options such as increasing pension contributions, investing in additional income-generating assets, or working part-time during retirement.

How Much Pension Will You Receive?

To determine how much pension you will receive, consider State Pension, workplace pensions, and any personal pensions. 

Check your pension statements and the government's State Pension forecast tool to estimate your pension income.

Assets

Assets such as property, collectibles, or shares can be sold to generate additional retirement income. 

Consider the potential tax implications and any impact on your lifestyle before deciding to sell assets.

Do You Have Other Income?

Other income sources, such as rental income, part-time work, or annuities, can supplement your pension and investment income during retirement. 

Identify these sources and estimate their contribution to your overall retirement income.

If you are considering doing part-time work during retirement, try to find something you enjoy doing that can generate an income.

Do You Have Home Equity?

Home equity could help you boost your retirement income through downsizing or equity release schemes.

You could obtain an equity release loan against your property and cash out a tax-free lump sum, or take occasional smaller withdrawals.

Review Your Other Income Sources and Assets 

Regularly review your other income sources and assets to ensure they align with your retirement goals. 

This could entail revising your financial plan, making adjustments to your spending, or looking for additional sources of income.

If you own an investment property that generates an income for you, you could continue to receive the monthly rental, or decide to sell the property instead and invest the proceeds.

If you own another property, such as a holiday home, you could consider leasing it out.

Consider Your Investment Options

Investment options such as stocks, bonds, and property can provide additional income and capital growth during retirement. 

Consider diversifying your portfolio across various asset classes and sectors to spread risk and work towards long-term financial objectives.

Remember...

It is important to understand the associated risks and potential downsides of investing during retirement: Investing always carries risks, and the value of your investments can go up or down. 

How to Approach Retirement Investment Planning for Financial Security

Retirement investment planning involves balancing the need for growth with the desire for security.

As you approach retirement, it is important to focus on low-risk, income-generating investments, such as bonds or dividend-paying stocks.

This approach helps protect your capital while providing a steady income during retirement.

Very important

Diversifying your portfolio is essential to reduce risk.

Consider spreading your investments across various asset classes, including equities, bonds, and cash.

Consulting a financial adviser can help ensure your investment plan aligns with your risk tolerance and long-term financial goals.

Calculate After-Tax Rate of Investment Returns

Calculate your after-tax rate of investment returns in order to estimate your actual retirement income. 

Factor in the current rates for capital gains tax, dividend tax, and any applicable allowances when making these calculations, and be aware that tax rates and allowances may change in the future.

Also remember...

Actual investment results may be affected by matters such as how the market is performing and your own personal situation.

Assess Risk Tolerance vs. Investment Goals

Balancing risk tolerance and investment goals is crucial to achieving your retirement objectives. 

Evaluate your comfort with risk by considering factors such as your investment horizon, financial goals, and personal circumstances, and adjust your investment strategy accordingly to align with your long-term goals.

Stay On Top of Your Financial Projections

Review and update your financial projections on a regular basis to account for changes in your life, the market, and how your investments are performing.  

This will help keep you on track with your plans for retirement.

The Importance of Retirement Estate Planning

Retirement estate planning ensures your assets are distributed according to your wishes, while also helping to minimise inheritance tax.

Having a legally sound will is essential, as this outlines who will inherit your estate and how it will be managed after your passing.

Beyond a will, consider setting up trusts or gifting assets while you are still alive.

These options can provide financial benefits for your loved ones and reduce the potential tax burden on your estate.

Consulting an estate planner can help you navigate these decisions effectively.

Step 4: Make a Retirement Plan

Make a retirement plan by listing your financial goals and how to achieve them. 

Include a timeline for meeting these goals, as well as any adjustments to spending, savings, and investment strategies. 

To factor in changes in your financial situation, market conditions, and personal circumstances, regularly review and update your plan.

Answering the following questions may help you when setting up your plan: 

When Can You Retire?

Determining when you can retire involves assessing your financial readiness and ensuring you have sufficient income and assets to support your desired lifestyle. 

Review your retirement plan on a regular basis and make any necessary changes.

How Will You Retire?

Consider how you will retire, such as gradually reducing your work hours or fully retiring at a specific age. 

When making this decision, think about your personal situation, your finances, and how you would like to live.

Will You Have Any Income Gaps?

Identify any income gaps during retirement, such as unexpected expenses or periods of reduced income, and create a contingency plan to address these situations.

One way to avoid gaps in income is to try and repay as many debts as you can while you are still working. 

If you are anticipating gaps in your income at the planning stage, you could consider retiring later to continue increasing your reserves.

If you think you will need a lump sum to cover a large expense, you could potentially withdraw from your pension.

Always speak to a qualified financial or pensions advisor before making a withdrawal from your pension. 

How Much Tax Will You Need to Pay in Retirement?

In retirement, you may still be subject to income tax, capital gains tax, and inheritance tax.⁴ 

Your tax liabilities will depend on your income sources, such as pensions, investments, and property. 

Use HMRC's tax calculators and seek professional advice to estimate your tax obligations in retirement.

Retirement Strategies for UK Residents: Effective Approaches

For UK residents, utilising tax-efficient retirement options like ISAs, personal pensions, and workplace pensions can make a significant difference.

These products allow you to save for retirement while benefiting from tax relief, maximising your savings potential.

Take note

It is essential to understand the rules and limits for each product.

Additionally, delaying your state pension can increase your payments.

If you do not need to access your state pension immediately, you may wish to defer it, which can boost your future income.

Speak to a financial adviser to explore the most effective strategies for your situation.

Step 5: Whom to Talk to About Retirement Planning

When discussing retirement planning, it is important to seek advice from professionals such as financial advisers, pension specialists, or independent financial advisers. 

They can help you look at your current finances, figure out what your options are, and make a plan for retirement that fits your needs. 

Ensure that any adviser you speak to is regulated by the Financial Conduct Authority (FCA) to guarantee the quality of their advice.

What to Do 4 Years Before Retirement: Preparing for a Smooth Transition

Four years before retirement is a crucial time to reassess your financial situation.

Start by estimating your retirement income from all sources, including pensions, savings, and any investments.

This will give you a clear picture of whether your current savings are on track to meet your retirement goals.

It is also a good time to reduce any debts, such as mortgages or personal loans.

Paying these off before retirement can significantly reduce financial stress and free up more of your income for day-to-day living.

Consider speaking with a retirement planner to ensure you are on the right path.

Speak to a Retirement Adviser

A retirement advisor can provide expert guidance on your retirement planning, including assessing your financial situation, setting goals, and recommending investment strategies. 

Ensure the advisor you choose is regulated by the Financial Conduct Authority (FCA) to guarantee the quality of their advice.

Consult an Equity Release Broker or Adviser

If you are considering using home equity to boost your retirement income, consult an equity release broker or advisor. 

They can help you explore your options, understand the risks, and identify the most suitable equity release scheme for your circumstances.

Discuss Your Plans With Your Family

Discussing your retirement plans with your family can provide valuable support and insight. 

They may offer suggestions, raise concerns, or help you identify additional resources to achieve your retirement goals.

Retirement Planning for Individuals: Personalised Strategies for a Secure Future

Every individual’s retirement plan should reflect their unique financial situation, lifestyle choices, and health considerations.

Personalising your strategy means taking into account your savings, pension options, and any other income streams you may have.

It is also important to review how these factors will change as you age.

A key part of individual retirement planning is ensuring your plan is flexible.

Life can be unpredictable, so having options—whether through additional savings, downsizing, or investments—ensures you can adapt to any changes that arise.

A financial adviser can help tailor a plan specific to your needs.

Finalise Your Choice

After considering all aspects of your retirement planning, finalise your choice by consolidating your financial objectives, adjusting your investment strategy, and regularly reviewing your progress. 

This will help keep you on track to a potentially comfortable and secure retirement.

Remember...

When planning for retirement, it is vital to assess and manage the risks associated with your investments and other financial decisions. 

Diversify your investment portfolio, maintain an emergency fund, and consider insurance products to protect against unforeseen circumstances.

How to Plan for Retirement in Your 50s: Essential Steps

In your 50s, retirement planning becomes critical.

Start by reviewing your pension pots and estimating how much income you will need in retirement.

It is also a good time to consider consolidating any pensions you have accumulated from various jobs into one place for easier management.

If you are behind in your savings, focus on catching up by maximising pension contributions and using any tax relief available.

You may also want to reduce risky investments and shift towards more stable options, ensuring your savings are protected as you near retirement.

The Key Benefits of Effective Retirement Planning

The key benefits of effective retirement planning include financial security, peace of mind, and the ability to maintain your desired lifestyle during retirement. 

By proactively planning for retirement, you can... 

• Minimise financial stress 
• Avoid potential pitfalls 
• Make informed decisions that help you achieve your long-term goals

Understand that your actual results could be different depending on your specific situation and the market environment.

The benefits of retirement planning must be balanced with an understanding of potential risks and challenges during retirement, but do not delay when it comes to looking at your later-life needs and options.

Common Questions

In Short: Retirement Financial Planning

Planning for retirement involves setting clear goals, determining your financial needs, considering your income options, creating a comprehensive plan, and seeking professional advice. 

You could be on your way to a potentially comfortable and secure retirement by adhering to these guidelines and periodically reviewing your plan.

Once you know how much income you will need during retirement, and how much you can potentially generate, it will be much easier to plan for the future, so be sure to follow these retirement planning steps.