After working hard for decades of your life, it is normal to want to have enough to get by and fulfil some of your retirement dreams.

For many people, having enough income in retirement is the primary long-term objective of their financial plan.

However, a recent study reported by IFA magazine found that almost half (48%) of Brits said they were concerned they had not saved enough for their retirement and feared running out of money at some point.

And this isn’t the preserve of low-income earners. The Guardian recently reported on the continuing careers of several household names as they move into their 70s and 80s, often driven by financial necessity.

Read on to discover five ways to help ensure you don’t run out of money in retirement.

1. Track all your pension pots

The first step to take toward ensuring you have enough money for your retirement is to track all your pension pots.

Unbiased reports that there is an estimated £19.4 billion lost across 1.6 million pension pots in the UK.

If you think you might have lost a pension pot, you can request statements from your pension providers, past and present. If you have a workplace pension, contact your employer for the provider’s details.

If you are still struggling to make progress, then you can use the free government Pension Tracing Service.

Once you have tracked your pots, you should have a clear idea of what your current financial standing is.

Clarity regarding your pension funds is an important step toward ensuring you have enough in your retirement as it means you can determine how much more you need to save.

2. Determine how much is “enough” and build your budget from there

You previously read about finding your “number” and working out how much you need to retire and be financially independent.

This is an integral step in making sure you have enough in your retirement as it specifies just how much “enough” is.

The Pensions and Lifetime Savings Association estimates that you would need an annual income of around £43,000 to retire “comfortably” as a single person, and £59,000 if you’re in a couple. A “moderate” retirement lifestyle would require around £31,000 and £43,000 respectively.

When working out how much you will need in retirement, you might consider:

  • Regular expenditures
  • One-off big expenses
  • Potential care costs
  • What you want to leave your beneficiaries.

A financial planner can work with you and use cashflow modelling to find a range of figures that consider your current pension fund, your desired retirement plan, and variables outside your control, such as inflation and life expectancy.

You may need to revisit your current budget and put aside more money for your pension. Or you may want to make adjustments to your retirement plan based on your priorities.

Once you know roughly how much you need to save for the retirement you have always wanted, you can start working and saving toward that figure with purpose and dedication.

3. Consider delaying your retirement date

The age you choose to retire significantly affects your total retirement income.

The current State Pension Age is 66 (rising to 67 in 2028) and you can usually access your defined contribution pensions from 55 (rising to 57 in 2028).

Data from the Office for National Statistics life expectancy calculator shows the current life expectancy for 57-year-olds in the UK to be 84 for men and 87 for women. It also reveals that this demographic has a 1 in 4 chance of living to 92.

So, if you were to retire at 57, there is a good chance your pension would need to last around 30 years or more.

If after using cashflow modelling you find that you are unlikely to reach your target fund at your desired retirement age, you might consider slightly delaying your retirement.

Delaying your retirement date by even just one year can considerably boost your pension fund. Not only does this entail making an additional year’s worth of pension contributions, but it also means having one year fewer of your retirement to fund, which as you saw earlier, could save you as much as £43,000.

Though you may have always had a desired retirement age in mind, pushing it back by just a year or two can make a significant difference to your pension and could mean you are able to fulfil your retirement dreams while ensuring you have enough income.

4. Ensure you access your pension pot tax-efficiently

Once you start drawing from your pension, ensuring you do so tax-efficiently can help it last.

For example, you can usually withdraw 25% of your pension, up to £268,275, as a tax-free lump sum. Anything above this will normally be taxed at your marginal rate – and so taking a large sum could push you into a higher tax bracket. This may deplete your pot more than you expected, leaving you with a savings shortfall later on.

You could also consider deferring your State Pension if your personal or workplace pension is sufficient. This could help prevent you from moving to a higher Income Tax bracket.

For every nine weeks you defer your State Pension, you receive an additional 1% when you come to claim it – around 5.8% for every year.

Of course, deferring your State Pension could mean you have bigger tax bills to pay when you finally claim it as you would claim a larger amount. But it could be beneficial to wait until you have depleted your other forms of income, to help prevent you from paying more tax on your pension.

Planning your pension withdrawals carefully can save you a significant amount in tax, maximising the longevity and value of your retirement fund.

5. Build a retirement plan with a financial planner

A financial planner can help you develop a comprehensive financial plan that balances your retirement goals with sufficient income.

They can use cashflow modelling to work out how much you need to save to ensure you achieve the lifestyle you desire, and they can also help you get there by creating a budget for your current and future expenses.

Your financial plan can also include any inheritance you wish to leave for your beneficiaries, meaning you can rest assured that your wealth will continue to support your children, grandchildren, relatives, and friends when you are gone.

A financial planner can help ensure you have a well-structured retirement plan that provides a sustainable income, allowing you to enjoy your retirement years without the fear of running out of money.

To speak to a financial planner, get in touch.

Email or call 0117 959 6499.

Risk warnings

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.

The Financial Conduct Authority does not regulate cashflow planning.

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.