19th March 2024 - Tracey Payne

7 practical tips that could help Generation X feel more confident about their retirement 

As Generation X, often described as those who were born between 1965 and 1981, starts to retire, research has found that many don’t feel confident about their financial future. If you’re worried about how secure your life will be once you stop working, there may be some practical steps you could take.

According to a survey from Just Group, 52% of Generation X say they are not confident that they will have enough saved for a good standard of living after work.

It’s not surprising that Generation X isn’t feeling confident about retirement – many are supporting other generations. 3 in 10 are providing financial support to adult children, while around 1 in 10 are helping elderly relatives.

So, you might not only be worrying about your circumstances but those of your loved ones. Supporting others financially could mean you’re neglecting your long-term financial wellbeing too.

If you’re nearing retirement, here are seven practical tips that could help you feel more confident about the future.

1. Understand what your income needs in retirement will be

There isn’t a one-size-fits-all answer when calculating how much you need to save for retirement. If you haven’t already taken a closer look at your income needs, doing so now could help you feel more confident. Sometimes the uncertainty can be more worrisome than the answer.

You might find you’ve put enough away to secure the retirement you want. On the other hand, if you find there’s a shortfall, you’re now in a better position to adjust your retirement plan or take steps to bridge the gap.

It can be difficult to take your annual income needs and understand how this relates to your pension or other assets. Working with a financial planner could be useful if you’re struggling to see how you could use a lump sum to create a regular income.

2. Review all your sources of retirement income

While your pension is likely to be your main source of income in retirement, it probably won’t be your only one.

You may receive a State Pension in your later years. For the 2024/25 tax year, the full new State Pension is more than £11,500 a year. This may not be enough to fund the retirement lifestyle you want alone, but it could provide a useful foundation to build on.

In addition, you might have other assets that you could use to create an income, such as savings, investments, or property.

So, if you’re worried you aren’t saving enough for retirement when reviewing your pension, a comprehensive financial plan could put your mind at ease. 

3. Take steps to reduce debt

Taking steps to reduce outgoings by paying off debt ahead of your retirement could be useful.

Not only does it mean you may be financially secure with a lower income in retirement, but making overpayments could reduce the amount of interest you pay to service the debt.

With mortgage or rental repayments often being one of the largest bills households face, paying off a mortgage before you retire could be beneficial. Indeed, the Just Group survey found that homeowners are significantly more confident that they will achieve a good standard of living in retirement.

4. Check how your pension is invested

Usually, the money you pay into a pension is invested. Over the long term, potential investment returns may help your pension grow. As a result, checking your pension is invested in a way that’s appropriate for you could be valuable.

Typically, you’ll be able to choose from several different funds when deciding how your pension is invested. These funds will have different risk profiles and criteria, so you could choose one that’s right for your needs. If you haven’t selected a fund, your money will often be invested through the default option, which might not be right for you.

Keep in mind that investment returns cannot be guaranteed and investing carries risk. It’s important you choose a level of risk you’re comfortable with and that reflects your financial circumstances, as well as your retirement plans.

5. Make sure you’re claiming all the pension tax relief you’re entitled to

To encourage people to save for retirement, the government provides pension tax relief. This means some of the money you’ve paid in tax is added to your pension. As a result, a pension is a tax-efficient way to save for retirement.

Pension providers will usually claim tax relief at the basic rate on your behalf. However, if you’re a higher- or additional-rate taxpayer, you’ll need to fill in a self-assessment tax return to claim the full amount you’re entitled to. 

6. Increase your pension contributions

If you find there is a gap between the value of your pension and the amount you need to live the retirement lifestyle you want, one of the most obvious options is to increase your pension contributions if you’re able to.

Even a small, regular boost can really add up. Your contributions will usually benefit from tax relief and, as the money is invested, it has the potential to grow during your working life. As investment returns will then be invested themselves, you could benefit from the effect of compounding.

In some cases, your employer may also increase the pension contributions they make on your behalf.

7. Book a meeting with your financial planner

It’s never too soon, or too late, to create a tailored retirement plan. Whether you’re hoping to retire in the coming year or it’s still more than a decade away, reviewing your financial plan will help you step into retirement feeling more secure and confident.

If you’re reading this but don’t yet have a tailored retirement plan, we could work with you to design a strategy that considers your goals and circumstances. Please contact us to arrange a meeting.


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