In this article, I will be exploring four big regrets commonly experienced by retirees. These are the aspects of retirement that many people wish they had approached differently, both prior to and during their retirement. While these regrets may not apply to everyone, these insights are based on experience from working with clients in retirement who have shared their experiences with me.

REGRET #1: NOT SAVING ENOUGH

The first regret that many retirees have is not saving enough for retirement. Many people underestimate how much they will need in retirement and fail to contribute enough to their retirement accounts. According to research done by Unbiased.co.uk, 17% of people in the UK over age 55 don’t have sufficient savings for retirement. This is an alarming amount of people.

The Pensions and Lifetime Savings Association commissioned a study on Retirement Living Standards in the UK, which utilised independent research from Loughborough University. The study takes a lifestyle-centric approach to analysing average retirement income, providing examples of what various retirement income groups could realistically afford. The income groups are categorised as Minimum, Moderate, and Comfortable, and are presented for both single retirees and couples.

For singles:

For couples:

The study gives an indication of the level of income required at retirement to live a particular lifestyle. It’s important to note that everyone’s situation is different, and we will all need different levels of income. However, its useful to identify how much income you will require in retirement and how much your retirement portfolio can generate for you in retirement.

A quick way to find out how much you may need save up is to work out your annual retirement expenditure – please see this link to an expenditure questionnaire to help you breakdown and calculate your annual expenses. Once you have this figure, divide it by 4% and this should give you a capital amount. For example, if you require an income in retirement of £25,000 (before tax) then the amount you may at retirement is in the region of £625,000 (£25,000 / 4%).

This is based on the 4% rule which is a guideline for working out how much money you can safely withdrawal from your retirement savings each year without running out of money.

Please note and I will stress that this is not an absolute answer and please don’t rely on this as there are many other factors you need to consider –  the composition of your portfolio (how it is invested and within what tax wrappers), changes in taxes and legislation, unexpected expenses and other personal circumstances that may have a significant impact on your retirement plans.

But if you have calculated a gap between the amount, you have now and the amount you require at retirement, you can start thinking of putting a plan in place to address this gap.

A good financial planner will use sophisticated cash flow modelling to identify your ‘financial number’. Your financial number is the capital or total amount of your retirement pensions and investments that you are required to save up in order to help you generate a tax-efficient, sustainable income throughout retirement.

REGRET #2: OVERSPENDING ON UNNECESSARY ITEMS

The second regret is overspending on unnecessary items, such as a big house, nice car, or giving money away without proper planning.

This point is very subjective as for some people purchasing an expensive car may give them pure joy and happiness whilst for some the thrill may fizzle out after a few months before the regret kicks in.

I once worked with a couple who both bought Ferraris when they retired. For the car enthusiasts, it was a Ferrari 459 and a Ferrari California. A few years into retirement, the excitement of having the sports cars faded and since they liquidated a large part of their investment portfolio, they were concerned about how they would fund their ongoing retirement costs. However, as I mentioned above, this is all very subjective and for real car enthusiasts, this may have bring real joy and happiness.

I also worked with a couple that upsized their main home when they retired. So, they handed in their notice at work, sold their main residence and took out a substantial interest only mortgage to purchase their ‘dream’ home. Little did they know that due to economic factors they could not control, the interest rates went through the roof, and they found themselves having to dip more into their retirement portfolio to repay the increasing costs of the mortgage. I worked with this couple to put in place an effective withdrawal strategy and a plan to create some peace of mind.

Some of the happiest retirees we see are the ones that have downsized their main home to a ‘lock up and go’ house so they can travel and see the world.

While it’s important to enjoy life and spend money on things you love, overspending on things that don’t add value to your life can put a strain on retirement savings and limit financial flexibility in retirement.

To avoid this regret, it’s important to create a budget and prioritise your spending, focusing on things that truly matter to you.

REGRET #3: NOT HAVING SOMETHING TO RETIRE TO

The third regret is not having something to retire to. Many people have a financial plan for retirement, but they don’t consider how they will spend their time in retirement.

Without something to retire to, retirees may feel bored or unfulfilled, leading to a less satisfying retirement. To avoid this regret, it’s important to plan for activities that you enjoy and that give you a sense of purpose. This could be volunteering, pursuing a hobby, playing a new sport, or starting a business.

Getting to retirement age, you have built up significant intellectual assets. Many retirees have valuable skills and experiences that they can use to benefit themselves and others, but they may not utilise them in retirement. This can lead to a sense of loss of purpose and missed opportunities. To avoid this regret, retirees should consider using their skills and experiences to start a business, volunteer, or mentor others.

REGRET #4: NOT WORKING WITH A RETIREMENT PLANNING SPECIALIST

The fourth and final regret is not working with a retirement planning specialist. Retirees may think they can handle their finances on their own, but a professional can provide valuable insights and strategies to help maximise retirement savings and plan for the future. A retirement planning specialist can also help retirees navigate complex financial issues such as taxes and estate planning.

To avoid this regret, retirees should consider working with a professional financial planner to create a comprehensive retirement plan.

Finding the right financial planner can be a challenging process, but it is important to take the time to do your research and ask the right questions to find someone who a good fit for your needs is. I have created two documents that may help you find the right financial planner. You can find them here.

CONCLUSION

Those are some of the biggest regrets of retirees: not saving enough, overspending on unnecessary items, not having something to retire to, and not working with a retirement planning specialist.

If you’re approaching retirement, it’s important to take these factors into consideration and make a plan for your retirement. As a financial planner, I encourage you to seek professional advice and make a plan that works for you.

Please take note of the following:

• This guide is for information purposes and does not constitute financial advice, which should be based on your individual circumstances
• A pension is a long-term investment and the value is not guaranteed. Any advice or considerations are personal to each individual’s circumstances.
• The value of investments may go down as well as up and you may get back less than you invest.
• The Financial Conduct Authority does not regulate Cashflow Planning.