The Flying Colours team is incredibly excited about our new TV advert running on ITV 3 from mid-February. This campaign poses the question: ‘What’s Your “Why” for Retirement?’ and invites you to consider the important lifestyle factors and goals you want to achieve in your later years. Once you have a picture of your core aims, you then need to think about what age you’d like to retire at, and how best to fund your dream retirement.
These are crucial questions when you’re planning for later life and our three-part ‘What’s Your “Why” for Retirement?’ series will help you answer them. This month, we’re starting with the importance of setting goals in retirement, and how you can decide on yours.
Setting clear goals provides more clarity on your retirement planning journey
When you begin planning for retirement, building wealth in your pensions and savings is likely a priority. However, without a clear understanding of “why” you want to retire and what you hope to achieve, it’s difficult to know how much you need to save.
As a result, you might not build wealth in the most suitable way. For instance, you could be contributing far more than necessary to savings and investments, meaning that you sacrifice your quality of life in the short term. On the other hand, you might not save enough, so when you reach retirement, you’re unable to meet certain goals or maintain your desired quality of life.
Failing to consider when you’d like to retire could create hurdles too. For instance, you can’t typically access your pensions until the normal minimum pension age (NMPA) of 55 (rising to 57 in 2028). So, you might struggle to retire at 50 unless you build up funds outside of your pensions – in ISAs, for example. Additionally, planning for retirement at an earlier age requires a well-thought-out savings strategy to ensure financial stability. It’s crucial to research options and seek guidance on how to retire early in the UK, as it involves navigating various investment avenues and understanding tax implications. Ultimately, the right financial planning can help you achieve your retirement goals without unnecessary setbacks.
In short, unless you know what kind of retirement you’re trying to achieve, it’s difficult to create the right financial plan to achieve your aspirations. Establishing clear goals allows you to tailor your savings strategies and investment choices effectively. Additionally, exploring flexible retirement options explained can provide insight into various paths you might take, helping to ensure that your financial plan aligns with your desired lifestyle in retirement. By understanding the different possibilities, you can make informed decisions that support your long-term vision. In addition to traditional retirement options, it’s essential to consider selfemployed retirement planning strategies, which offer unique benefits tailored to those not tied to an employer-sponsored plan. These strategies can help you maximize your tax advantages and ensure that you are financially prepared for your retirement years. By integrating these approaches into your overall financial plan, you can create a robust strategy that not only meets your immediate needs but also secures your future.
Research shows that a defined aim could make you save more efficiently
As well as giving you more direction with your financial plan, understanding precisely what kind of retirement you want to achieve could make you a more effective saver. By defining your retirement goals, you can tailor your savings strategy to align with your envisioned lifestyle, whether it’s traveling the world or enjoying leisurely days with family. Furthermore, incorporating some of the top retirement planning strategies, such as automating your savings and diversifying your investment portfolio, can significantly enhance your preparedness for the future. This focused approach not only boosts your savings but also instills confidence that you’re on track to achieving your desired retirement.
A 2021 study from the University of Stirling found that households with goals are more likely to save, and more inclined to invest those savings in riskier assets, which could provide greater returns. Further to this, households with four or more savings goals held more than twice the number of stocks as those without defined targets.
You may also find that deciding on your “why” for retirement makes it easier to stay motivated and continue contributing to your savings regularly. This is because having a vague aim of saving for later life might not inspire you that much.
Yet, if you have clear goals, you might picture the holidays you want to take or the time you’ll spend with your grandchildren. These images are far more powerful motivators that put everything in perspective and encourage you to remain on track with your financial plan. For more on goal-setting, take a look at our article: How Setting Clear Financial Goals Could Help You Achieve Your Dream Lifestyle – Flying Colours.
3 ways to determine your “why” for retirement
1. Consider your core values in life
Your core values in life may dictate many of the decisions you make about your retirement. For example, family might be important to you, so you may want to retire and spend more time with your loved ones. Alternatively, you might place a lot of value on travelling and exploring new cultures. In that case, you might be looking forward to retiring so you can take extended trips to dream destinations. Regardless of your priorities, having a clear understanding of your core values can lead to better financial choices. To help you align your retirement plans with your aspirations, consider seeking out comfortable retirement planning tips that can guide you in creating a sustainable financial roadmap. By prioritizing what matters most to you, you can ensure that your retirement years are fulfilling and enjoyable. Exploring bucket list ideas for retirement can also enhance your experience and provide excitement as you look forward to this new chapter in life. Whether it’s learning a new skill, volunteering, or visiting specific landmarks, these activities can create a sense of purpose and fulfillment. Ultimately, by focusing on what genuinely brings you joy, your retirement can become a rewarding journey tailored to your unique passions and interests.
Many people also place importance on being financially stable and having the opportunity to support their loved ones in retirement. You might want to help adult children get on the property ladder or pay for a wedding, for instance. If you have grandchildren, you may want to contribute to their education too.
By thinking about your core values, you can begin building a picture of the important aspects of your life that you want to nurture in retirement.
2. Make decisions about your living situation
Decisions about your core values and ideal lifestyle in retirement may inform your living situation. If spending time with family is important, for example, you’ll want plenty of space for your children and grandchildren to come and stay with you. On the other hand, if you’ll be travelling a lot, you may prefer a smaller home that is cheaper and easier to maintain. Also, downsizing your home could be a useful way to access more wealth for retirement.
It’s useful to consider your living situation ahead of time, so you can ensure that your home suits your lifestyle in retirement.
3. Think about how you will find purpose in retirement
The transition to retirement can be challenging, especially if work gives you a sense of purpose. It’s common for retirees to struggle with a lack of direction and potentially miss the social aspects of work. If you’re unsure about how you will fill your time and find meaning in your later years, you might want to explore your options now. Some retirees like to volunteer so they can still enjoy a work-like schedule and environment, while others are happy to relax at home. You might try new hobbies and interests too.
Thinking about why you want to retire could make you happier in your later years because it gives you a clear focus, whether that’s spending time with family, travelling, or taking up a new hobby. By identifying your motivations for retirement, you can create a plan that aligns with your desires and values. This approach not only enhances your overall fulfillment but also allows you to assess your retirement readiness more effectively, ensuring that you are financially and emotionally prepared for this new chapter. Ultimately, a purposeful retirement can lead to a more vibrant and satisfying life.
Get in touch
Following these steps can help you to determine your “why” for retirement. Next month, in the second part of the series, we’ll explore how you can use this picture of your ideal lifestyle to create a clear retirement savings goal. After reading this, you might feel you need support with your retirement plan. We are here for you.
Email hello@fcadvice.co.uk or call 0333 241 9900 to find out how we can help.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only. All information is correct at the time of writing and is subject to change in the future.
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 performance.
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 investments (and any income from them) 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.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.