Will your need for income change during your retirement years, and if so, by how much? This can be a difficult question to answer and the response is likely to differ from person to person. It will depend on factors that are personal to you such as the age at which you retire and your state of health in your later years. Stock market performance and the impact of inflation also need to be taken into consideration when planning your finances. Many people retire when they are still comparatively young and in good health. Some decide to ease themselves into retirement by working part time or on a consultancy or self-employed basis. Others see this time as their opportunity to travel extensively and take up new interests and pursuits. This means that they are likely to want to spend considerable amounts of money in this phase of their lives. For many, this could be ten or even 20 years. However, at some point most of us will begin to slow down and may find we develop health problems. At this stage, for some people the amount they need to live on will diminish. For others this could mean spending more on medical and nursing care.

PLANNING FOR WHATEVER THE FUTURE HOLDS It wasn’t so very long ago that it was the general rule that men retired at 65 and women at 60, with a state pension and a defined benefit pension from their employer which paid out a fixed income, regardless of the spending needs of the recipient. Now things have changed and people are increasingly retiring with defined contribution pensions that give them greater flexibility when it comes to planning their income to match their lifestyle during their retirement years. Planning for future expenditure should involve thinking about your likely spending needs in your later years, and should address issues such as whether you want to downsize to a smaller property, how much money you want to pass on to your family and how much you need to have as a reserve that could be used to pay for care costs. It helps to have these figures in view during your working years when you are contributing to your pension, as they can help determine how much you might need to save to achieve your goals.

PENSION PLANNING ADVICE PAYS Research by Citizens Advice (1) has revealed that seven out of ten people who accessed their pension pots since the new pension changes were introduced in April 2015 didn’t shop around or consider other planning options for their retirement. Getting professional advice on retirement income planning has never been more important than it is today. Planning your income needs to meet your likely pattern of expenditure can help alleviate financial worries later on in life. It can help you understand what your financial future might look like, take into account your attitude to investment risk, and give you a roadmap for the future. The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.

(1) Citizens Advice, People not shopping around under the pension freedoms, June 2016.