Continuing with the end in focus
16 July 2025It was great to meet up with a younger client recently who really is taking seriously their future retirement and the way that this might look from a financial perspective.
Many in the accumulation phase of their working life are joined into employer auto-enrolment pension plans (which I might add is a good thing and a great success from the volumes of people now saving for their retirement) with minimum contributions which in reality is unlikely to give them the capital that is needed at retirement to have a good standard of living. Sure, the State Pension will add to the overall anticipated household income in retirement when available (around age 67 but rising); however, the combination of both income sources may well still be disappointing. For reference, it should also be noted that the minimum retirement age is increasing from age 55 to 57 from April 2028.
As an aside, we are advocates of checking your State Pension forecast (through your Government Gateway or via a paper form), and this client had done just that for both himself and his spouse. In this case, the mortgage had been repaid, and the monthly mortgage cost saving was now to be focused on pension and capital accumulation for a comfortable retirement.
This leads back to the theme of fund accumulation (rather than decumulation and drawing benefits which has tended to be a focus of past blogs) and looking at the big picture and the final ‘pots’ that might be available to provide the overall flow of cash. In our experience, there is usually more than one source of funds for retirement, creating a combination of income streams / capital pots to provide the overall position. This might be several workplace pensions (people rarely stay in one job for life), private pensions, ISAs and savings, and of course the State Pension, as examples. Some feel that they can rely on a future inheritance, although there is always a risk that long term care costs may have other plans.
Each of us is individual and there are many points to consider looking forward to effectively model a potential outcome. These factors might include:
- Funding levels both now and into the future
- Existing policy / plan / investment types
- Future inflation risk
- Attitude to investment risk (both now and in the future), along with any ethical / environmental / social / governance preferences for investment
- Health and fitness
- Children and dependant costs and capital requirements (the bank of mum and dad!)
- Debt position and anticipated earnings or future capital events (like selling a business)
You might anticipate that this example list is in theory endless, with many different answers, but each component is likely to steer us into a view of what an individual model might look like for you. Managing expectations and keeping the position under regular review is important to ensure that you stay on course. Of course, life events may well get in the way, but these can be factored in as time moves forward, with regular financial reviews.
Please do speak to the team at Chapters Financial about your overall financial planning position, needs and aspirations for the future when thinking about your retirement, even if this is a few years off.
No individual advice is provided during the course of this blog.
Keith Churchouse FPFS
Director
CFP Chartered FCSI
Chartered Financial Planner
Chapters Financial Limited is authorised and regulated by the Financial Conduct Authority, number 402899
