The contents on this page have been produced by Fanny Snaith, money coach in cooperation with borofree. These contents are for guidance only and do not represent a recommendation for investments nor an advice to get a loan. The debt guidance is provided for educational purposes and to allow consumers to use their money more effectively.
Work out how much you would need for your own ‘comfortable retirement’
Firstly, it is important to work out what is a comfortable retirement for you. Research has shown that 9 out of 10 workers will not be able to afford a comfortable retirement after a lifetime dedicated to work. In fact, it’s estimated that a couple who have paid off their mortgage will still need at least £40,000 a year, to live comfortably in retirement. But what is a comfortable retirement? Everyone’s financial situation is different. While some may have worked a 9-5 office job their whole life, others may be embarking on a career of self-employment where stability and ability to regularly add to a pension pot may differ.
Alternatively, some workers may be reliant on their employment for an income while other people have money set aside in investments such as stocks or even property, helping to provide an additional stream of income. As well as understanding how much money you are likely to have access to in retirement, it is important to think about what your lifestyle and your responsibilities may look like during this time.
Although this is many years in the future for a lot of people, thinking about whether you may have children or grandchildren to support in retirement can help decipher what financial position you may need to be in. Once you have concluded on what it is you require for a ‘comfortable’ retirement then work backwards from this end goal to create actionable steps to reach this from your current position.
Seek out a financial advisor
A great first step to working out how much you need to be setting aside each month is to call on the services of a financial advisor to help. This way, a professional can work through your current financial situation and identify what steps and actions you can take to reach the goal of a comfortable retirement.
Whatever your goal is, you’re more likely to reach it by starting now. The easiest way to do so is by simply putting pen to paper. Map out your own financial situation and decide how much you are able to set aside each month to put towards your later life. You may not stick to this plan rigidly straight away but that’s ok, its about working out what works and what doesn’t. At the end of the first month, look back and identify what areas have and haven’t worked and adapt the plan accordingly. This is much better than winging it entirely. Once you have identified what you need to do each month, each year and each decade to reach your goals, then strive to live your financial life with purpose, because as we have seen from the last 18 months – anything can happen. Once you have your action plan laid out you may wish to look into what other financial options are available to you to help strengthen your ability to save for the future. There are hundreds of free resources available to educate you on the basics of the stock market and investing, all which can aid you in creating a strong savings pot for retirement. Whatever route you choose, by setting aside at least 15 minutes a day to work on your finances, you are investing in your future and will be sure to reap the rewards in later life.