When can I afford to retire?

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Clients that end up in our offices often have a question in mind. It might be a pension question; it could be an investment question or something entirely different. But often the question being asked isn’t the real question.

When someone comes in, they often want an immediate answer to an immediate problem. Like, “I’ve got these pensions, what shall I do with them?

But often what they mean is “do I have enough to retire?”

Lots of people have got to the point where they’ve had enough of work. They want to swap Monday morning meetings for Monday morning musings. They want the freedom to do what they want, when they want.

And that’s what ‘retirement planning’ is all about. It’s not about this pension or that pension, this investment or that investment.

It’s about starting with the end in mind.

Step 1 – Design it – What does your retirement look like?

Starting with the end in mind is about figuring out what you want your life to look like after work.

There are a couple of parts to this:

  • What does the day-to-day look like?
  • What are the big things you want to do?
  • When do you want to achieve this?

It’s simple, but ain’t easy. It’s part thinking, part calculating. That’s where a good financial adviser comes in.

Step 2 – Cost it – What does your retirement cost?

A good financial adviser will help you with two things:

  1. Work out what you want from life
  2. Work out what that costs

They’ll work out the day-to-day stuff and then put together a timeline for the big stuff.

Take a recent example. Michael and Emma came in, wanting to retire in 4 years. They told us they need around £2,000 per month to cover the basics and a bit more for the extras.

They also had a few things in mind they wanted to do, things like refurbishing the kitchen, going on a big holiday and helping their daughter purchase her first home.

We put together a timeline of events for them, working out the cost of each one. Then we worked back from there to work out if they had enough money.

And then it’s about working out whether you have enough!

Step 3 – Fund it – Can you afford to retire?

This is the fun part. It’s about working out how much you’re going to have coming in and what the gaps are.

So, in Michael & Emma’s case, they needed £2,000 a month for their day-to-day, plus their big-ticket items (kitchen refurb etc.). They’ll both get full State Pensions, that’ll give them £16,000 per year from age 67. Michael’s old final salary pension scheme that he’d forgotten about will give him another £6,000 per year from age 65.

Long story short, they had a big gap from age 60-67, but then a small gap once their State Pensions were in payment. They had built up private pensions, investments & savings of around £200,000 and wanted to know if this was enough.  We showed them that they had enough to do everything they wanted and didn’t need to work for 4 more years.

Music to their ears! They came in with a pension problem and walked out with financial freedom.

Spoiler alert, Michael and Emma are both retired and thoroughly enjoying life after work!


Retirement planning isn’t about flogging your guts and saving as much as you can. It’s about looking at the big picture, working out what you want from life and working back from there. It’s about working out how much life will cost and whether you’ve got enough.

Maybe you’ve already got enough, maybe you need a little bit more. Either way, it’s worth finding out.

Let me know how you get on.

All the best,

James Mackay, Independent Financial Adviser in Bristol

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