How picturing retirement could help you plan ahead

What comes to mind when you picture retirement?

Perhaps it’s travelling more, spending time with family, starting a new hobby. Or maybe it’s simply having more freedom over how you spend your days.

Whatever retirement looks like to you, having a picture of the future can make it easier to start planning for it. But for some people, that picture isn’t so clear. 

New PensionBee research found that 11% of Gen X - those born between 1965 and 1980  - can’t picture their retirement at all. That’s more than twice the proportion of any other generation. More than half didn’t seriously think about their pension until age 46 or later, while 48% feel they left retirement planning too late. 

Part of the challenge may be how we think about retirement in the first place. When it feels far away, it can be hard to imagine what you’re actually planning for.

Instead of focusing on retirement as a distant milestone, it could help to think about the life you’d like to have in the future. What would you like more time for? Where would you like to live? How would you like to spend your days?

Making that future feel more real could give you something clearer to plan towards.

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The challenge of picturing retirement 

For much of our working lives, retirement can feel a long way off.

There are usually more immediate demands on our time and money. These might include mortgage or rent payments, raising children, caring for relatives or simply paying the bills.

This may be particularly relevant for Gen X. Many started work before Auto-Enrolment - which made workplace pension saving more widespread - was introduced in 2012. They may have also entered the workforce as traditional final salary pensions (a guaranteed retirement income based on your salary and length of service) were becoming less common in the private sector.

Some Gen Xers are also part of the so-called ‘sandwich generation’, meaning they may be supporting their children while also caring for ageing parents. With so much happening today, planning for tomorrow can be difficult.

Rethinking what retirement means 

The word ‘retirement’ can sound very final. You finish your career and enter a completely different stage of life. But retirement doesn’t have to mean stopping altogether.

PensionBee’s research gives a varied picture of what retirement could look like for Gen X and it found:

• just over half would like to travel;
• almost half picture spending more time with family;
• a similar number see themselves slowing down and resting; and
• around one-in-five expect to continue working in some form.

Retirement could also create space to explore a different side of yourself. You might learn a new skill, turn an interest into a small business, take on a new challenge or spend more time doing something you already love.

Thinking about retirement this way changes the question. Instead of only asking, “When can I afford to stop working?”, you could ask: “Who would I like to be when I have more freedom over my time?”.

That can make retirement feel less like an ending and more like something to plan towards.

Is it too late to start planning in your 40s or 50s?

Starting earlier gives your pension more time to potentially grow. But reaching your 40s or 50s without the pension you hoped for doesn’t mean it’s too late to start.

Depending on when you retire, you could still have years or even decades to save. Someone starting at 40, for example, could have around 30 years to build their pension pot if they work into their late 60s.

A useful first step is understanding where you are today. You could:

• check how much you’ve saved, including any pensions from previous jobs;
• look at how much you and your employer are contributing; and
• use PensionBee’s Pension Calculator to estimate what you might need based on the retirement you picture.

Money that stays invested for longer also has more opportunity to benefit from compounding. This happens when investment returns have the potential to generate further returns. Tax relief, where the government effectively adds money to your pension when you contribute, and employer contributions could also help build your pension over time.

Saving more won’t be realistic for everyone. PensionBee’s research found that 40% of Gen X savers who felt they started planning too late said they couldn’t afford to engage with their pension sooner.

If there’s little room in your budget now, that may change. Childcare or loan repayments could end, or a pay rise could provide an opportunity to revisit your contributions. Even increasing them by 1% or 2%, if you can afford to, could make a difference over time. 

And if you’re starting from scratch, listen to our Pension Confident Podcast episode, “How to start a pension from £0 at 50”. You can also watch the video on YouTube or read the transcript. 

Thinking of your future self differently

Retirement can be difficult to plan for when the person you’re saving for feels far removed from who you are today.

Psychologists sometimes call this ‘future self-continuity’. Put simply, it’s how connected you feel to the person you’ll become. Research suggests that people who feel closer to their future selves may be more willing to make choices that benefit them later.

There’s also evidence that making your future self feel more real could influence how you save. In one study, researchers showed people an image of what they might look like when they were older. Those who saw their older selves were slightly more likely to make a one-off retirement contribution.

You don’t necessarily need an ageing filter to try this change in perspective. Instead of thinking about retirement as something abstract, think about the person you’re planning for. They’re still you, after all.

You can try picturing some of the details of your future life, such as:

• what an ordinary day might look like;
• where you might live;
• who you might spend your time with; and
• what you’d like to have the financial freedom to do. 

You could even write a short note to your future self, perhaps describing the life you hope to be living and what might matter most to you.

The takeaway

It’s understandable if retirement still feels a little hazy. Life rarely follows a neat plan, and what you want from your 60s and beyond may change by the time you get there.

But you don’t need a detailed vision of retirement to start thinking about it. Sometimes, it’s more useful to picture the everyday. Instead of focusing only on an age or the size of your pension pot, you can start to think about the life that money may need to support.

That picture doesn’t have to be fixed. Priorities change, as do work, relationships and plans. But even a rough idea can give you something more concrete to plan around.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information shouldn’t be regarded as financial advice.