Saving for retirement: Planning makes perfect

Planning for your retirement is something that can be so easy to put off and worry about later – after all, there’s plenty of time to deal with that, surely?

The likelihood is that you don’t plan on working every single day of your waking life, but that there are actually many goals and aspirations that you dream of fulfilling. Careful financial planning is needed to realise these – and that’s where our quick guide to making the most of your retirement savings comes into play.


  • In recent decades, retirement – and the way people save for it – has radically changed.
  • It’s now down to the individual to ensure a reasonable income in later life.
  • While this affords us more control, this means a plan needs to be in place that aligns with our needs and goals.
  • The basic principles of saving for retirement are straightforward, yet the decision-making can be enhanced by seeking the help of a professional adviser.

Things have changed beyond recognition for retirees of today compared to those who began their working lives a few decades ago. The very idea that retirement might last up to a decade or more was fanciful, as was the notion of taking responsibility for their own pension savings.

According to the Office for National Statistics (ONS), a 65-year-old man can expect to live, on average, for another 20 years – a fifth of their total life span – while a woman aged 65 typically has 22 years ahead of her.1

Life expectancy is on the rise, meaning the savings of those working now will ordinarily need to last a long time. Also, unlike previous generations, people will need to be more proactive in building up those savings.

The reason behind this is that the generous defined benefit (or final salary) pensions that many of today’s pensioners could depend on are rare for those working now. Rather, people in their 40s and 50s probably have a mix of defined benefit and defined contribution schemes, which complicates retirement planning.

People in their 20s and 30s are likely to only have defined contribution schemes, meaning the responsibility falls on them to put enough aside for retirement, but they have more mastery over the investments they make.

While this all may sound a little overwhelming, don’t worry – it doesn’t need to be. Aside from the jargon and some of the complexities surrounding pensions, the key steps are, in fact, very straightforward. Read on for a quick guide to making the most of your retirement savings.

  1. Calculate how much you need

The way that pensions and retirement previously worked meant that planning was minimal. However, the way things are now is that the focus has shifted from that of age to planning for objectives.

“These days you’re saving for a purpose, with an end goal in mind,” remarks Tony Clark, Senior propositions Manager at St. James’s Place. “If you work backwards from retirement, that helps with working out what you need to do.”

Granted, it can be difficult to know exactly how much you need to have saved by the time you decide to retire, but an approximation can definitely help – just don’t feel dismayed by the number! A suggestion is to think of it in terms of having saved multiples of your salary by certain ages, or a percentage of your earnings.

  1. Maximise on your workplace pension

Many people embark on their pension journey by paying into a company scheme. These days, employees are auto-enrolled into a pension scheme – the perfect foundation to build on, says Clark.

Naturally, it makes sense to really maximise on your workplace pension, and so it pays to dedicate some time to it. The first step is to check how much you’re putting in, then see whether you can afford to increase this and, finally, check how much more your employer would pay in if you were to boost your contributions.

“If you can afford to contribute more, see if there’s a trigger point at which your employer doesn’t just match your contributions but goes even further, because that can make a huge difference to how much your pension can grow,” notes Clark. “If they do pay more, take advantage of it.”

  1. Consider how your money is invested

It’s probable that, unless you chose otherwise, your workplace pension was automatically invested into a ‘default’ fund. Yet while pensions are for the long-term and regular ‘meddling’ isn’t recommended, it’s nevertheless important that it’s invested in a way that’s right for you.

“We all have different plans, attitudes to risk and objectives, so look at what funds are available, get some advice and see whether or not your pension is invested where you want it,” says Clark. “That pension is your money and your future, so own it, have a look at it and lift up the bonnet.”

Let’s not forget that even small contributions made on a regular basis can quickly add up as time goes on. This is thanks to the magic of compounding – when the profit generated by your investments then generates its own growth.

  1. Look at more options

Pensions aren’t your only option when it comes to saving for retirement – Clark points out that there’s nothing stopping you from also saving into a Stocks & Shares ISA. The combination of a pension and an ISA gives you instant diversification – the golden rule of investment – and is therefore perhaps a better approach than saving into just one or the other.

“Having an ISA as well as a pension gives you more options – and the retirement of the future is all about options,” he says.

  1. Monitor your journey

It goes without saying that our objectives, circumstances and risk appetites change over time. In that respect, it’s worth having regular reviews of what you’re paying into your pension and where the money is going.

“It’s easy to focus on the here and now, but be mindful of what your income needs will be in older age,” Clark suggests.

“For example, make a mental note to review your contributions every time you have a pay rise. If you don’t feel you can afford to pay in more at that point, that’s OK. Just keep it in mind as your situation might change in a few months’ time.”

  1. Seek advice

Retirement – and the way we save for it – has dramatically changed, and that’s where planning makes perfect.

Clark concludes with the following advice:

“The fundamental difference is that there is no one-size-fits-all anymore – everyone’s retirement will be different, so everyone needs a plan. As we all have different views and objectives, it can make a huge difference to work with an impartial, expert adviser who can map out a plan with you and help you keep it on track. With the time you’ve got available to save, a little advice will go a long way.”


The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested. An investment in equities does not provide the security of capital associated with a deposit account with a bank or building society.

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