How to avoid retirement regret – at any age

Imagine if your retirement was captured on the big screen – what would the title be? ‘Invest Side Story,’ or perhaps: ‘Raiders of the Lost Pension,’ playing at a cinema near you?

Or, could it be the latest psychological thriller: ‘The Retirement That Never Was’? Nobody would want that.  But for two in five UK retirees, the latter hits close to home, as some form of retirement regret looms large over their golden years.[1]

Whether it stems from not boosting pension contributions during their careers, not adjusting their lifestyle for the retirement they'd imagined, or simply retiring too early – clearly, something needs to change.

Time to save, save, save

Savings can be the absolute cornerstone of a satisfying retirement. Even minimal contributions can build a foundation. A notable 17% of retirees wish they had ramped up their pension savings while they were working.[1]

Hindsight is indeed a wonderful thing, but who wants retirement regrets? At Pension Geeks, we suggest using a simple rule of thumb for retirement savings: aim to save half your age as a percentage of your salary. Doing so could set you on solid ground for a regret-free future.

Consider this: If you're 42, half your age is 21. Now, replace the nostalgia of youth with practicality. Translate 21 into 21% - the amount you could be contributing to your pension based on your age.

It seems hefty, especially as a percentage of your salary. But, remember, your employer's contributions to your Defined Contribution pension in the UK could significantly lighten your load.

Suppose your employer offers a 7% pension contribution (surpassing the legal minimum of 3% of your salary). Your portion is effectively reduced to 14%. If your employer matches pension contributions, you're in luck – a 10.5% contribution from your side meets the ‘half your age’ rule.

Starting young could yield the best results. If you begin saving at 22 instead of 42, you'd only need to contribute 11% annually.

And, if you start saving earlier, you’ll be considering retirement for longer. It’ll give you more time to picture your future and realise what you could do to prevent those niggling regrets later down the line.

We say it loud and clear: starting early can pay off.

MoneyHelper (a free, impartial government-backed service to help you understand your pension in more detail) even have a handy budget planner. It can help identify any wiggle room you have to increase your contributions.

Please remember though, the value of your pension pot can fall as well as rise, isn’t guaranteed and the final value of your pot when you come to take retirement could be less than has been paid in.

Picture a regret-free retirement

Imagine the film title inspired by your dreamy retirement – what’s the vision? Picture that picture. Yes, today. Now.

Picturing what you want your retirement to look and feel like could help you be more proactive with your savings today. It makes sense, really: knowing what you want helps you to get it.

A regret among retirees is leaving the workforce prematurely – nearly 8% wish they had retired later.[1] Stave off regrets with a holistic retirement plan that considers both the financial and emotional sides of your life. You need to fund the fun, after all.

It starts by taking stock of what you’ve got

How much have you saved up until now? Even taking stock of a total across various pots can help to refocus your retirement plan. It can also help you to realise how much money you might need in retirement, and how far off that goal you might be now. 

The Retirement Living Standards have a good guideline based on the cost of living, and split their costings into three lifestyle standards: minimum, moderate, and comfortable. Check out the Retirement Living Standards and see which one you’re on track for.

Track down those old pensions

Try and find any old pensions you may have lost touch with – yes, the ones buried in with the rest of your paperwork. The ones stashed away in drawers or shoeboxes you refuse to acknowledge... If paper trails are elusive (or if you’re an avid recycler, go you!), the Pension Tracing Service could help you out.

Lastly, contemplate what you might actually want to do in retirement. Realising what brings you joy in life now could help you to decide what kind of lifestyle you’ll want to have in the future.

Whether you love going out with friends, travelling, or finding time to pursue hobbies, you’ll need to be able to fund it.

So, knowing exactly what it is that makes you tick can really help you to plan your retirement and shore up your defences against future regrets.

It could even be worth spending five minutes reviewing your finances using MoneyHelper’s Midlife MOT tool for a personalised report into improving your financial outlook.

When you know what you want, achieving it becomes simpler.

Source:

[1] Data source: Canada Life UK. Research conducted by Opinium among 663 over 55s who said they were retired, with fieldwork conducted between 19 – 22 March 2024.