Writing a retirement plan

Tips for writing a retirement plan

3 minute read

Will your finances be sufficient to fund your retirement? Here are some simple tips to help you plan for life after work.

You may dream of sailing the high seas in a yacht, buying a small cottage in the countryside, or perhaps you don't intend to change anything about your lifestyle when you reach retirement age. Regardless of your goals, you should already be developing a retirement plan.

Preparing in this way may seem like an obvious step, but the evidence would suggest otherwise. The seventh annual Aegon Retirement Readiness Survey — published in June 2018 — indicates that only 13 percent of workers have a written retirement plan! An additional 44 percent say they have a plan, but that it is not written down. And only 32 percent of workers have a backup plan if they are unable to continue working prior to their planned retirement.

Planning tips

1. Writing a plan — regardless of your level of financial literacy — should not be seen as a substitute to obtaining professional advice, specific to your country and/or individual circumstances. Aegon, for instance, is active in 20 countries worldwide and may be able to advise you. Click here to find your local Aegon office

2. Come up with a short description of the type of retirement you envisage for yourself (and partner). Ask yourself whether you expect to maintain your current standard of living, or do you expect to be spending more or less during retirement.

3. How long do you think the retirement phase of your life will last? Remember due to improving health that many people live 20 years or more after reaching the statutory retirement age.

4. Make a spread sheet to chart your anticipated income and costs for each potential year of retirement,

5. Write down in the spread sheet the sources of income that will be available to you (and partner) during retirement. This could include:
- state pension schemes
- supplementary pension schemes
- savings
- annuities
- investments / shares
- Major assets (e.g. home/car)

6. List your current debts/liabilities such as mortgage and tax liabilities, and seek to start paying them off.

7. Using information you've collected, make a budget for your retirement years. You could consult a free retirement readiness app available on many pension providers' websites. Examples include Aegon UK's Retiready.

8. Is there a gap between your projected income and potential costs? Don't panic. Seek professional advice to help bridge any gap and/or moderate your ambitions. You may not wish, for instance, to stop working completely on reaching retirement age.

9. Aegon's retirement research shows that retirement isn't all about wealth. Consider the importance of health and try to live healthily and stay active. See, Successful Retirement - Healthy Aging and Financial Security

10. Have a Plan B. No matter how healthily you live, the potential for an unexpected injury or illness can never be discounted. What if you have to stop work earlier than expected due to ill health? Or, if you develop a medical condition after retirement that imposes a strain on your finances? Make sure you have a fallback position such as a more modest plan and/or chronic illness insurance

More Information

Finally, various groups within society face unique challenges when it comes to saving for retirement. Aegon's research has over the years focused on the specific needs of:

Women
Homemakers
Self-employed
LGBT community
Employees in their 20s