How to take the stress out of retirement planning and pensions

Ideally, the years leading up to retirement should be filled with excitement as one gears up to reap the rewards of decades of hard work. Yet, retirement planning and managing a pension can be a stressful process.

How much do I need to retire? How much is the state pension? Do I need to speak to a pensions expert? These are all common questions, and if someone does not know the answer, it can be anxiety-inducing. 

Planning for retirement involves a lot of careful consideration of finances, lifestyle goals, and current circumstances. It can be an overwhelming process, made even more challenging by the current cost-of-living crisis. My Pension Expert’s recent research shows that just 35% of UK adults are confident that they will be able to retire when they want to, highlighting the difficulties many people face when preparing for their later years.

So, in recognition of Stress Awareness Month this April, here we explore ways to alleviate stress when planning for retirement.

Creating a strong plan

It is clear that growing stress among retirement planners is being perpetuated by the cost-of-living crisis and current economic landscape. Inflation remains above 10%, placing a squeeze on people’s finances. 

Three in five Britons feel stressed about later life planning, according to a 2022 Aviva report. 

This is understandable: retirement is a significant, and potentially quite expensive period of one’s life. Which is why preparing for it as early as possible can help reduce the risk of experiencing retirement planning stress.

Indeed, the best way consumers can ensure they are on track to a secure retirement is to create and maintain a detailed financial plan.

To get this started, consumers need to conduct a full audit of their financial situation including their income, expenses, and any outstanding debts. It is possible that some individuals may realise that their financial situation is not as precarious as they thought. However, it is only by effectively engaging with their pension that they can fully comprehend their financial status. 

Once getting to grips with their financial circumstances, a proper strategy can be put in place. Unfortunately, this can raise stress-inducing questions such as, how much do I need to retire? 

It is important to note, there is no such thing as a minimum retirement income. Everyone’s retirement needs are different, and there are many factors that can influence how much a person needs to save such as desired retirement lifestyle, retirement age, or current economic trends. For example, 54% of UK workers in a recent survey from My Pension Expert said they dream of being able to travel and see the world once retired. 

Working all of this out alone can be overwhelming, so seeking the advice of a pensions expert can make a difference. 

Speak to a pensions expert 

It is important that consumers remember that it is perfectly acceptable not to have all the answers when it comes to retirement planning. In fact, at times it can be a complicated undertaking. For this reason, it is hugely valuable to seek advice from an independent financial adviser. 

An independent financial adviser will have the expertise to evaluate an individual’s financial position and offer tailored recommendations to meet their retirement objectives. 

For example, with so many financial products available and questions to answer, such as whether to choose a pension annuity or a higher lump sum, or how much pension contributions are tax-free, consulting with an adviser can guide pension planners in understanding their options, assessing risks and benefits, and devising a strategy that considers their current financial circumstances. 

Stress is a natural response to a difficult situation – and planning for retirement can often fall into that category. However, it is important not to let the pressure take over. By remaining calm and speaking to a financial adviser, planners are taking the right steps to make sure their transition from working life to retirement is as smooth as possible.