How to start planning for retirement

Does the idea of retirement planning sound alien to you? 

Retirement may seem far away in the distance for some. However, as life expectancy has risen, it’s a possibility that some of us will live into our nineties and beyond. For the average person, that works out as around 45 years of employment followed by 30 years of retirement – which is a considerable stretch of time to rely on pension savings. 

So, how do you prepare for these potential three decades of retirement? 

The answer: to start as soon as you can. If you haven’t started yet, it’s always better late than never. 

How much should you be saving?

The greatest impact you can have on your retirement success is the amount you’re able to save, plain and simple. As a rule of thumb, the amount you ‘should’ be putting away is 15% of your gross income, including any company match.  

However, for some, that is not a realistic target at the moment in time, and that’s fine. There are many challenges individuals face that could get in the way of that 15%. But the sooner you can start saving, the better off you’ll be in the long run. So starting now and steadily increasing your contributions up to that 15% mark can help to get your saving strategy on the straight and narrow. 

How do I make it all happen?

First you’re going to get a sense of what your ingoings and outgoings look like. Compiling all of this information will allow you to create a sort of financial benchmark to measure your progress against. Once you have an idea of how your finances look, you can think about setting yourself a target. 

Your target should be what you want from retirement. How much do you want to live off? Considering you may be retired for around three decades, it’s good to think about what sort of lifestyle you’ll want to live. You may want to travel, pursue your hobbies to an increased extent, or treat your family to various activities and holidays. Factor any of your desires for retirement into your target. That way you can set accurate goals. 

Your goals are like your milestones. Once you’ve determined how much you’ll want to live off in retirement, setting measurable, periodical goals will help you to keep saving. If you’re far off from achieving your 15% gross income in pension savings, then you may wish to set goals building up to that amount over a period of time. If you want to surpass that percentage and really get into the saving habit, you can aim to push past the 15% mark – in the end it will all be to your benefit. 

Make sure to write it all down and keep it somewhere easily visible – that way you’ll keep yourself motivated. You don’t want it to be a case of ‘out of sight, out of mind.’ 

So, there you have it!

All it takes to start planning for retirement is a little bit of maths and actually getting your plan down on paper. Then it’s real, it’s happening, you’re planning. Even as you read this, you’re setting the plan in motion; you’re starting. Congratulations! 

For more information on how to create a robust plan for your retirement and the steps you can take to get there, don’t hesitate to get in contact