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B-Advised Blog

Looking Ahead: Planning a Private Pension

15/06/2022

A comfortable retirement requires years of foresight and careful consideration. If you want to ensure that you have enough money to facilitate a fulfilling and stress-free retirement, planning a private pension is essential.

Unfortunately, a large proportion of individuals don’t plan sufficiently. According to the Money and Pensions Service, 35% of retirees report that they left financial planning for their retirement to the last two years of their career, or didn’t prepare at all. With a state pension, you won’t be left with nothing if you fail to put a private pension in place, but you are likely to have to make sacrifices during your retirement that you would otherwise not have to make if you had planned ahead.

Here at B-Advised, we have helped a great number of individuals plan for their retirement. We believe that opting to plan a private pension is one of the most important and empowering financial choices that you can make. So, today we are going to take a look at what factors you need to take into consideration when looking ahead to your retirement, and how you ought to approach the planning of your private pension.

What is a private pension?

Private pension schemes – like workplace pensions and personal or stakeholder pensions – are a smart way of ensuring that you have enough money on top of your state pension, in order to support the sort of retirement you are dreaming of.

For most workplace and personal pensions, how much you get depends on a number of factors:

• The total amount you have paid in
• How well your pension funds investments have done (if applicable)
• Your age – and possibly your health – when you start taking your pension

Woman calculating finances

Work out retirement goals when planning your private pension

It truly is never too early to begin thinking about what life after work could look like.

Your retirement is a wonderful opportunity to do more of the things you enjoy, and a well-planned retirement can enable you to spend your time in ways that feel fulfilling and meaningful to you. So, when it comes to planning for your later life, you need to decide what you want your retirement to look like, and how you want to spend your time and money.

In order to work out what sort of goals you need to have for your private pension, you must begin by asking yourself some important questions. These questions will help you to create a clearer picture of what sort of financial expenses and personal goals you need to consider in your later life.

Will you still have rent to pay or mortgage payments to make?

First things first, it’s essential to consider what your living situation will be.

If you are going to be renting or making mortgage payments, during your retirement, you will need to ensure that, at the bare minimum, your pension will be able to cover these living costs.

At the very least, you need to plan for being safe and secure in your home during later life. Rent, mortgages and bills will need to be accounted for if nothing else. A financial adviser can help by producing accurate projections of your basic living costs.

Will you own a car? What running and maintenance costs do you need to consider?

What means of transport you plan to use during your retirement is another major factor in how much money you will require from your pension in order to support yourself.

Cars can be incredibly expensive to run, especially as fuel costs seem set to continue rising. If you’re planning to continue using a car, it’s essential that you factor the costs this will entail into your retirement plans.

Will you be looking to travel or pursue a new hobby?

By definition, as a retiree, you will no longer be at work for 8+ hours a day, so, one of the most important factors to consider is how you would like to spend your time, ideally.

Perhaps you would like to travel and seek new and exciting experiences. Or, you may be dreaming of finally investing time and money into a new hobby, or reawakening a past hobby that, over the years, you have not had enough time for and have lost touch with.

You may wish to travel internationally and explore far-flung places, or perhaps you simply want to spend your days pottering in the garden and spending time with family members. How you dream of using your time during retirement will have a huge impact on how much money you need to be putting into your private pension. Some retirees will require slightly less than their working income, others who wish to live more lavishly may actually want to plan for a retirement income that supersedes their previous working income.

Mature couple riding bikes

Keeping fit and healthy will help you enjoy the most out of your retirement

How is your health?

Lastly, it’s essential to take a look at your health. When you are reviewing your retirement options and making plans for a private pension, you must consider your current health and lifestyle, along with any age-related illnesses.

These factors may have a profound impact on when you wish to retire, and what necessities you will need to put in place in order to maintain your health during your later life.

Could a financial adviser help?

We know, it’s a lot to take in. Planning for your retirement can be incredibly overwhelming, and this is particularly true if you feel that you have left this planning a little late.

Working with an independent financial adviser can help you to create a sound plan for your retirement. By reviewing your circumstances and creating accurate projections, they will be able to provide you with sound recommendations that are tailored to your specific needs.

Even if your retirement seems a long way off right now, it’s important to start planning well in advance. Here at B-Advised, we can help you create a clearer picture of your pension plan. Simply get in touch today and we’ll get the ball rolling.