Financial advice
Our articles offer tips on financial planning for retirement, including a guide comparing the cost of care homes with independent living and assisted living.

Financial Retirement Planning

Read our tips on creating a financial plan for retirement, plus how to save money and budget too.

Couple financial planning for retirement
Financial advice
Posted 23 August 2023
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Budgeting for a happy retirement

Financial planning is the key to a comfortable retirement. But getting around to the actual planning can be daunting and many people don’t know where to start. According to a Financial Times survey in 2018, around a third of British people don’t have a pension and a further 20% don’t know how much money they have in their pension pot. This is even more concerning when you factor in the effects of the rising cost of living

How much should I have in my pension?

According to the government, in 2021, the average weekly pension for a couple was £511, while single people got by on an average of £246 per week. In 2022, The Telegraph reported that around £12,000 a year (or roughly £230 a week) per person would give a ‘basic’ standard of living. To put that in perspective, if you’re eligible for the full state pension, then in 2023 you’ll receive £185.15 per week (roughly £9,627 a year), so you would need an additional source of income to meet the basic threshold. The Telegraph also calculated you would need around £18,000 a year (or £346 per week) for a ‘good’ lifestyle and £33,000 (£635 per week) for a ‘comfortable’ lifestyle.  

But although these figures are designed to give you a guide, how much you actually need will depend very much on your individual circumstances and aspirations – not to mention inflation.  

Don’t panic - plan! The best way to take control of your later life financial planning is step-by-step – creating a simple list of smaller, easily achievable tasks that add up. Here’s our top 10 things you can do to put your retirement planning back on track.

Woman looking at her mobile phone and planning finances

Ten top tips for retirement planning

  1. Review what you have now. 
    Go through all your pensions, insurance policies, mortgage statements, credit card debts, legal documents and savings accounts to ensure you have as complete a picture as possible of your current finances and predicted future income.   
  2. Make a checklist of areas that need attention. 
    Are your insurance policies still relevant? Do you have holes in your pension provision or long term savings needs that need addressing now? Set yourself a timeframe and start to address each issue one by one.
  3. Set a budget 
    Think about how much you spend every month and review your outgoings, including things like direct debits. Can you make cutbacks, on things like TV subscriptions that you barely use, or shop around to get a better price for your utilities? If you’re worried about your food bills, can you make simple switches to supermarket own brands to save money? Give yourself a budget for spending on everyday living, but don’t forget to provide for things like household maintenance, new furnishings, car expenses, pet care and clothing. Then you should think about how much you can afford to spend on luxuries, like holidays, hobbies, eating out and gifts for your family. Finally, decide a figure to set aside to save for emergencies, rainy days and your future. Having a budget will make you feel in control of your finances and ensure you are more able to cope with a change of circumstance too. 
  4. Get advice on your pension options. 
    There’s no doubt pensions are complicated with some tricky decisions to be made, such as should you choose an annuity or drawdown pension – or a mixture of both? An annuity lets you convert your pension savings into a regular, guaranteed income, whereas with a drawdown pension your pot stays invested, usually in the stock market, and you live off the income that is generated. This means the amount you receive will vary.

    In 2016, the government introduced new pension rules which mean that from the age of 55 you can take your whole pension pot in cash and invest it in anything you want, from shares to wine, art or property - and the first 25 per cent is tax free.

    Alternatively, you can take smaller sums, with 25 per cent of each withdrawal tax-free and the rest taxed as income. Or you can take the 25 per cent tax-free cash and use the balance to buy an annuity.

    For free impartial advice talk to Pension Wise. You should also consider talking to a regulated independent financial advisor – though there is likely to be a fee.
  5. Is your home good for your finances?
    Your home is an important financial asset, but it can also be a financial drain. Ask yourself:
    •   Have you paid off your mortgage? Can you do it sooner?
    •   Is your house too big for you needs (perhaps now your children are grown)?   
    •   Is it energy efficient?
    •   Is the upkeep/maintenance becoming a burden, financially and/or otherwise?

    Downsizing often makes financial sense and can lead to an easier life – it’s good for your health and your wealth! Moving house can also allow you to embrace the opportunity to fulfil a dream to move to the coast or to the countryside.

    If you are a homeowner aged 55 or over, you can use your home to boost your income in retirement, by releasing the equity as a lump sum (but you should always seek independent advice first.) Did you know? If you choose a McCarthy Stone retirement property, our flexible moving in options – from renting to part buy, part rent may help you release the equity you want.
  6. Talk to your family. 
    Make sure you include your family in your later life financial planning - they can support you, offer advice and share their plans and wishes too. For instance they might be hoping that you move closer to them – or conversely, they may be planning their own move which could affect where you want to live. Research shows that nearly half of retired people haven’t talked to their children about money, savings and pensions, despite 60 per cent not wanting to be a burden.  
  7. Are you eligible for more financial support? 
    According to Age UK, £2.2 billion in Pension Credit and Housing Benefit goes unclaimed by older people every year, meaning nearly a million households are missing out on money that’s rightfully theirs. Our ‘five star’ free entitlements adviser helps ensure our customers get all the money they’re owed
  8. Make a will. 
    According to 2020 research by Canada Life , 51% of 55-64 year olds, 39% of 65-74 year olds and 22% of over 75s don’t have a will. It is not a cheery topic, but it is problematic. You might assume your assets will simply go to your nearest and dearest, but without a will there’s no guarantee. Spouses or ‘common law’ partners don’t automatically inherit everything without a will and the government gets the final say. Kelly Greig, a post-retirement specialist at Irwin Mitchell, also suggests that ‘Trusts may be appropriate to ensure your assets are protected and end up where you want them to go. Lifetime tax planning can also avoid taxes on death, so it’s important to take proper advice.” Did you know? There’s no Stamp Duty to pay when no money is handed over for a mortgage free property – for example, if it’s a gift or left in a will. 
  9. Attribute lasting power of attorney.  
    A lasting power of attorney is a legal document that details how and when you want to pass on responsibility for your financial affairs – and personal wellbeing - to a friend or family member should you become incapacitated. 

    Kelly says, “Everyone from the age of 18 needs a lasting power of attorney. It’s like a seatbelt – if you never need it, that’s fine. But if the worst happens, it’s invaluable. If you lose your mental capacity, you will need people to act for you and, without a power of attorney, the people closest to you will have to apply to the courts, which can take up to six months.”
  10. Plan for your funeral – and how to pay for it.
    The costs of a funeral can be significant – according to Sunlife in 2021, the average cost of a basic funeral was around £4,000, but if you add in the ‘send off’ party or wake it rises to £8,864. Just like making a will, pre-paying funeral costs, and sharing your wishes with your family, are practical ways to help them cope in the event of your death.  

Smart apps to help you save money, budget and plan 

We’re rounded up some of the smartest apps to help you to take care of your daily finances and save money on your essentials too. 

  1. Moneyhub
    Moneyhub lets you see all your accounts, investments, and borrowing etc. across your devices, including mobile, tablet and desktop. It analyses your spending habits and gives you tips to help you to change your behaviours and save more.
  2. Plum
    Plum also gives you an overview of your finances and analyses your spending but it calculates how much you can afford to set aside and automatically saves it for you, too. Plum can even switch things like your utility suppliers for you, if it finds you are overpaying. 
  3. Joulebug
    This green app saves you money while cutting your carbon footprint. It challenges you to make lifestyle changes, like using less energy, driving less and cutting back on plastic. You even sync the app with your utility bills to see how much money you save each month.
  4. Too good to go
    Save money and help reduce food waste with this clever app which allows you to buy ‘Magic Bags’ of food from local businesses (including some chains) for a huge discount. This can be anything from hot fresh food from local restaurants to bread and cakes or fruit and vegetables from nearby grocery stores.
  5. Hotukdeals
    Save on your shopping with this nifty app from Hotukdeals, which allows you to easily find bargains and discounts on everything from groceries to trainers, holidays to hobbies.  

A McCarthy Stone home can save you money 

Moving into a brand new McCarthy Stone retirement home brings loads of benefits - but many people don’t realise there are significant savings to be had too. As well as a beautiful, easier-to-manage, modern property and a friendly community on the doorstep, life in a McCarthy Stone Retirement Living or Retirement Living PLUS development can reduce your cost of living. Warm, energy efficient and easy to maintain, savings include lower energy and utility bills as well as often cheaper maintenance and running costs.

Find a retirement property

Cut your cost of living with McCarthy Stone

Concerned about the rising cost of living? Don’t compromise! McCarthy Stone can help you cut your costs and still enjoy the lively lifestyle you deserve.

Find out how to cut your costs

Financial planning for a new home

Read our guide to the seven ways we can help you budget for a move to a brand new retirement home.

Find out how we can help you budget

Are you getting the money you're entitled to?

Older people are missing out on pots of money they’re entitled to, have contributed towards and deserve. Find out how McCarthy Stone can help. 

Find out what you are entitled to

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