5 important questions to ask if you want to retire within the next 10 years

Whatever stage you’ve reached in your career, if you want to retire within 10 years, having a robust financial plan in place could help you achieve your goal.

According to research published by PensionsAge there is often a “clear disconnect” between an individual’s retirement expectations and reality.

You could avoid this disappointment by taking the time to understand your financial situation, setting goals, and creating a plan to help you achieve them.

If you want to retire in 10 years, it might be helpful to ask yourself the following five questions.

1. What do I want to do in retirement?

Retirement looks different for everyone. A retirement income that is “enough” for you may not be sufficient for someone else.

How do you picture your life when you stop working? Do you want to stay in your current home or would you be happy to downsize? Perhaps you’re looking forward to supporting younger members of your family financially?

Asking yourself what you want to do and what you hope to achieve during your retirement, could help you to set meaningful financial goals.

Many people have big dreams for their retirement: travelling, volunteering, taking up a new hobby or getting better at an existing one, spending more time with friends and family and so on.

The kind of lifestyle you want is likely to affect how much money you need to fund your retirement years.

2. How much will my ideal retirement cost?

A quick online search will return numerous estimates for the “average retirement income” necessary to achieve your desired lifestyle.

For example, Which? has set out three retirement income targets for “essential”, “comfortable” and “luxury” lifestyles based on single- and two-person households. According to this 2023 data, a single person needs approximately £32,000 a year for a luxury retirement and a couple needs £44,000.

However, your target retirement income is unique to you and will depend on what you want to do during your retirement. Average estimates may provide some guidance for planning your retirement finances but accurately forecasting how much income you’ll need is generally more complicated.

A financial planner can use advanced strategies such as cashflow modelling to tailor advice to your specific goals.

3. How long will my retirement last?

When planning your retirement finances, it’s important to factor in your life expectancy so that you have a realistic idea of how long your retirement could be, and how long your wealth will need to sustain you.

Research published by Canada Life has highlighted the potential of a “new retirement gap” between how long people expect to live and reality. If you underestimate how long your retirement might last when planning for the future, there could be a greater risk that you’ll have less money than you’d like later in life.

Conversely, making a realistic estimate of your longevity, by using an online life expectancy calculator, for example, could help you work out how much you need to save before you can retire comfortably.

4. Where will my retirement income come from?

Consider what provision you’ve already made. Possible sources of retirement income might include:

  • State Pension
  • Workplace or private pension
  • Savings, such as ISAs
  • Investments such as your portfolio or rental property
  • Freelance or consultancy work.

Gathering this information together will help you review your current savings strategies and assess whether you’re on track to retire within 10 years.

If you’re missing any information – for example, if you’ve lost track of old workplace pensions – it’s worth filling in these gaps to help you build a clear picture of what your retirement income might be.

Read more: 1 in 6 adults have tried to trace a lost pension – here’s what you need to know

5. How can I boost my retirement savings?

Figures published by Retirement Living Standards show that 51% of people focus on current needs and wants at the expense of saving for their future. And, only 23% are confident they know how much they need to save for retirement.

So, how can you boost your savings?

If you have a workplace or private pension scheme, you might want to consider increasing your contributions to benefit from generous government tax relief.

You can make pension contributions without an additional tax charge up to your Annual Allowance, which for the 2023/24 tax year is £60,000 (or 100% of earnings, if lower). If you are a higher earner or you have already started flexibly drawing from your pension, your Annual Allowance may be lower.

The basic rate of 20% means that every £100 contribution only “costs” you £80, as the government adds the remaining £20. Higher- and additional-rate taxpayers can claim up to 40% or 45% respectively.

In addition, employers must contribute to your workplace pension, making it an even more valuable asset.

In summary, if you want to retire within the next 10 years, it’s important to think about your goals and create a savings plan that will help you get to where you want to be.

Get in touch

A financial planner can help you understand your retirement income needs and plan ways to maximise your savings.

If you’d like help planning your finances for retirement, please email us at mail@delaunaywealth.com or call 0345 505 3500.

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.