Retirement is a huge milestone and one that’s lasting longer for many people. You now have more choice around when you want to retire, how to take an income, and what you want to do after you’ve given up work. Whilst more flexibility has certainly been welcomed, it can present you with some challenging decisions too.

Retirement used to be associated with kicking back and taking it easy. That might still be an important part of what you’re looking forward to. But, today, retirement is just as likely to be associated with new experiences. It’s not just the retirement lifestyle that’s been transferred over the last few decades either. As life expectancy has increased, our time after working lives has gotten longer too. It’s not uncommon for people to spend 30 or even 40 years in retirement.

On top of these two key factors, the way we take an income in retirement has changed as well. The introduction of Pension Freedoms in 2015 gave retirees far greater flexibility when they decided to access the money saved into a pension. It means retirement no longer follows a fairly similar path for most; retirement can be what you make it.

Financing a longer retirement

When you think about retirement planning, it’s often the financial side that first springs to mind. That’s natural, after all, it’s your finances that will allow you to achieve aspirations you may have.

Spending longer in retirement will clearly have an impact on finances, as they’ll need to stretch further. As a result, you’ll need to think carefully about how you’ll access the provisions in your pension and how you’ll use other assets. Purchasing an Annuity, which provides a guaranteed income for life, can offer security, but it may not suit your lifestyle.

On the other hand, your pension can remain invested and accessed flexibly using Flexi-Access Drawdown. But you’ll need to ensure you’re accessing your pension in a way that’s sustainable and considers life expectancy. If you only plan to make withdrawals for 20 years but end up living for another decade, it could place you in a financially vulnerable position.

Your life expectancy is a crucial part of calculating a retirement income and setting out your goals. However, it’s not just finances that should be considered in a longer retirement.

When and how to give up work

Have you thought about when you’d like to give up work? You may have a firm plan or a rough idea in your head, but if you’ve not considered life expectancy, you’re missing a crucial factor. If retiring at 60 means you’ll have four decades of not working, would it still appeal to you? For some, that will sound like a dream, but for others, it will give a reason to rethink.

In addition, you should think about how you’ll retire. More workers are attracted to giving up work gradually. Whether it’s cutting down current working commitments or launching a business, blending retirement and work is becoming more common. You may even decide to give up work entirely for a set period of time, before returning to the world of work further down the line. When you think about longer retirements, it makes sense that some will want to continue employment in some way once they pass traditional retirement age.

Filling your time in retirement

How do you plan to fill your days when you’ve retired? What one-off experiences do you want?

Answering these questions is important to create a retirement lifestyle that suits you. Perhaps you’re looking forward to spending more time with grandchildren, have grand plans to travel, or want to invest your free time in a hobby that’s been neglected.

However, whilst retirement is a time to look forward to, will you still be happy and fulfilled a few years into it? This is where planning your lifestyle is important. Retirement can promise much, but leave something to be desired if you don’t think about what’s important to you and set out priorities. Keep in mind how long you’re likely to spend in retirement as you set out making plans that will fill your time.

Of course, the above considerations are still linked to finance too. If you’d like help understanding what your retirement provisions could offer you and how to achieve your goals after giving up work, please contact us.

Please note: A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation and regulation which are subject to change in the future.