11th January 2023 - Sean Banks

Revealed: The key to happiness in retirement is focusing on experiences

Retirement is a milestone that’s often greeted with celebration. But what makes people happy during their later years? Research has revealed it’s experiences, rather than material items, that are most important. 

A survey from Royal London found 72% of those aged over 55 favoured experiences over material possessions. From seeing more of the world, to trying a new hobby, retirement offers an opportunity to create the life you truly want.

It’s not just the big-ticket experiences those approaching retirement believe are important. Many are looking forward to spending more time with loved ones. 

When asked about their life goals, retirees focused on creating lasting memories. The most important goals were:

The research found 17% of those nearing retirement worried about a lack of experiences, and the same proportion cited a lack of purpose as a concern. While worries are normal when you approach a big life event, setting out a plan can help you identify and realise your goals. 

Gary Beyer, protection product lead at Royal London, said: “It is clear to see that those aged 55 and over value experiences more than anything else, including material possessions. Being able to lead an active, healthy lifestyle, try new things, and travel to new places, combined with spending more time with family is the key to retirement happiness.”

Many people approaching retirement are focused on experiences that will create lifelong memories. However, the research also found that finances could mean retirement doesn’t live up to expectations. 

40% of over-55s say money is the biggest barrier to achieving their goals 

Among over-55s yet to achieve their life goals, 40% said money was the biggest barrier. 

The cost-of-living crisis further exacerbates financial challenges for those planning their retirement. 3 in 10 over-55s said they are changing their plans as a result. 

If you’re looking forward to a retirement filled with experiences that will make you happy, financial planning is crucial. It provides confidence about your long-term finances, so you can focus on what’s most important. 

Calculating if you’re on track to reach your retirement goals can be broken down into two key questions:

1. How much income do I need to reach my goals?

Having a target retirement income in mind is essential for understanding whether you’re saving enough.

Many retirees find their income needs fall when they stop working. You may have finished paying off your mortgage or no longer need to budget for the daily commute.

Research from Which? suggests a couple needs an annual income of £28,000 to live comfortably. While this figure is a useful starting point, keep in mind living expenses vary significantly. You should review your expected outgoings to create an income goal tailored to you. 

Remember, your income needs may change throughout retirement and could be affected by external factors, such as inflation. 

2. How much am I saving for retirement? 

With an annual goal in mind, you can start exploring whether you’re saving enough for retirement. How much do you have in your pension? What contributions are you making? And are there other assets you plan to use, such as savings and investments?

Condensing all the information required to understand if you’re on track can be difficult. As financial planners, we can help you understand how the value of your assets may change between now and retirement, and how you can use them to generate an income tailored to your needs. If there is a gap in your savings, we’ll work with you by creating a plan to get you back on track. 

Contact us to review your retirement plan

Please contact us to talk about your retirement goals and the steps you can take to reach them.

Risk warnings 

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future results. 

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts.  

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

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