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What makes a happy retirement?

Dani Skerrett

by , Team PensionBee

at PensionBee

21 Nov 2022 /  

retired couple sitting outside on the sofa

This article was last updated on 12/01/2023

Retirement has long been considered a single event in the milestones of our lives. First, you go to school, then you work and finally, you retire. But things are changing - life expectancy’s increasing, the way in which we work’s evolved, and economic challenges, like the rising cost of living, also play a part in how we’re planning for the future.

What does retirement look like these days?

While there’s no set retirement age in most personal and workplace pensions, you could plan your retirement based on your minimum withdrawal age, which is 55 (rising to 57 by 2028). Or, from when you can claim your State Pension, which is currently 66 years old (rising to 67 by 2028).

Although you’re able to start withdrawing retirement income from 55, this doesn’t mean you have to stop working and retire at that age. You might prefer to continue working and saving, depending on your circumstances. Your working life, along with your health, financial stability, any life goals you have, plus your family and social life, all play an important part when it comes to retirement planning.

Working life

Once you’re able to, you might want to stop working completely and focus on your hobbies and passions, such as travel or family. But there are other options too. If you still feel fit and able to, you might prefer to cut your working hours down to part-time, decide to work remotely or from home and, if you run your own business, you might want to keep working long after the ‘typical’ retirement age.

Financial stability

It can be difficult to know for sure if you have enough money to retire, with so many factors at play. You might have multiple pension pots, property you plan to rent out or sell, and various other forms of savings. To help visualise how far your savings could get you, you can use our pension calculator and input a few details such as your age, current pension pot, and the amount you’re contributing to estimate how much retirement income you can expect.

Health and life expectancy

It’s not just about considering the age at which you’d like to retire, it’s also important to consider your health and life expectancy - as this will dictate how long you’ll need your savings to last. Without considering how many years of retirement you might have, you risk taking too much money from your pension pots early on and running out, or not spending enough and having a less enjoyable retirement. Current life expectancy is 79 years for males and 83 years for females - so if, for example, you retire at the State Pension age of 66, you’ll need to budget for between 13 and 17 years of retirement.

Social life and goals

If you’ve any bucket list goals, the nearer you get to your desired retirement age, the more you’ll want to start thinking about how to achieve them, whether that be dreams of travelling, retiring abroad, re-decorating the house, learning a new skill, or taking up a hobby in retirement. Aside from your bucket list, give a thought to the social and family life you want to have in retirement. This could be volunteering your time to your local community or spending a few days a week taking care of your grandchildren. You might want to save enough so you can stop working altogether, or continue working to maintain a social life and independence well into retirement.

Planning for a happy retirement

It can be daunting when you start thinking about your plan for retirement and what you’ll need to achieve the lifestyle you want. Luckily, the Pensions and Lifetime Savings Association (PLSA) have developed the Retirement Living Standards report which helps you picture what your retirement could look like at three different levels.

The standards, ranging from the minimum of £14,400, to moderate at £31,300, and finally comfortable at £43,100 per year for a single person, show how far three different levels of retirement income can stretch. They’re visualised in real terms by using common goods and services like groceries, transport, holidays and clothing. For couples, the values are slightly higher at £22,400 for the minimum level, £43,100 at a moderate level, and £59,000 per year for a comfortable retirement.

When should you start saving?

Whether you’re just starting out in your first job, have been working a few years, or are nearing retirement, it’s never too late to start saving into a pension. If you’re employed full-time, it’s likely you’ll be enrolled in a workplace pension thanks to Auto-Enrolment. You’ll also qualify for the basic State Pension if you’ve paid National Insurance contributions for at least 10 years. If you have 35 years’’ worth of National Insurance contributions, you’ll qualify for the full State Pension - you can check your eligibility on the Gov.uk website. To help build your pension savings further, you could consolidate any existing pension pots you have into one or, if you work for yourself, set up a self-employed pension.

Thanks to the joys of compound interest, the earlier you start, the better chance you have for your money to grow. Take a look at some pension projections to get an idea of how much you can save whether you start at 25 or 45.

In the latest episode of The Pension Confident Podcast, Philippa Lamb is joined by Personal Financial Journalist and Money Blogger at Much More With Less; Faith Archer, Head of Media Relations at the PLSA; Mark Smith and Senior Engagement Manager at PensionBee; Priyal Kanabar, as they discuss what a happy retirement looks like to them. Listen watch on YouTube, or read the transcript.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. Anything discussed on the podcast should not be regarded as financial advice.

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