Brutal Planning Application

Updated: Nov 23, 2020

I know that I am probably stating the obvious when I say that the majority of us are aware that we need as much money as we can get hold of as we head towards retirement. Would you agree?

Catering for the “expected” in our later years is not cheap, so when the “unexpected” happens, it is rare that living costs down, and wow, have we as the human race been hit by the unexpected recently.

Don't give up

However, just because saving for retirement is challenging for most, it doesn’t mean we should give up; the current reliefs and allowances on pension contributions should give cause for optimism to say the least.

If you expect to retire on a final-salary pension and with no mortgage, your perspective on retirement may well be rosy; if you are grappling with debt and worried about having insufficient pension savings, it may be a different picture. If you fall into the latter category, please talk to somebody about it.

For some, the question is not how to retire successfully, but how to retire at all, given that there may be precious little in the way of a state safety net to fall back on.

Research from the Financial Conduct Authority reveals that around 15 million individuals are not saving anything towards their retirement and will have to rely entirely on the State Pension in their later years.


Of particular concern is the group of pre-retirees aged 55–64, only half of whom have given thought to how they will manage in retirement; and only a quarter know how much they have in their pension pot. These people may only have a few working years left to build their nest egg.

Failing to plan

Why do so many people fail to plan their retirement? This could be partly due to massively underestimating the amount of money they need to save. According to BlackRock, those who were asked to calculate how much they would need for their desired retirement income of £26,000 a year estimated they would require £233,000 in savings; and yet they would need a pot of £525,000 for this income, even including the State Pension.

People also underestimate longevity and therefore how long retirement could last. Only 7% of people aged 55–64 today expect to live to 90, but research indicates that half of them can expect to live that long. The obvious implication is that many retirement pots will run out too soon.


Many experts are warning that the end of final-salary pension schemes, chronic underfunding of defined contribution pensions, and increasing life expectancy are creating a perfect storm that threatens to destabilise the financial well-being of the coming generation of retirees.

The solution is to plan

You have to ask yourself: how much will I need, and how much can I afford to put away? Then you need to factor in any other sources of retirement income, and you can see the size of the gap you are trying to fill. Be brutally honest with yourself regarding how much the REAL cost of living will be at 55, 60, 65 and 70 years of age to start out with. If you have an advisor, get him or her to put down some projections based on historical annual inflation figures and over, rather than underestimate. The important thing to state without seeming to come across as patronising is that you DO something regarding YOUR PLAN; do not keep putting it off hoping it will go away, which is something we have ALL been guilty of.

Obviously, the younger you are and the longer the investment time horizon, the most you will have to gain when thinking ahead. However, middle-age is a time when incomes are at or near their peak, so there are significant opportunities to catch up.

Subject to limitations, people in the UK can make pension contributions of up to 100% of their earnings or £40,000, whichever is lower. While paying the maximum may seem a tall order, remember that the government rewards you for saving into a pension in the form of tax relief.

Worryingly, according to BlackRock’s research, 50% of people are unaware that the government boosts pension contributions; the research also showed that fewer than a third of people are aware of ‘pension freedoms’ changes and how these impact on their retirement prospects. This is further evidence that lack of awareness remains one of the key barriers to making adequate retirement provision. It is vital that savers know and understand all of the options open to them with regard to using their pension; and so important that they make the most of the current tax breaks whilst building one.

Acknowledgements to Financial Conduct Authority, Financial Lives Survey 2017

and BlackRock, Global Investor Pulse Survey 2017

To receive a complimentary guide covering wealth management, retirement planning or Inheritance Tax planning, contact David Dolman of Boag England Financial Planning LLP at

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