Retirement planning is an important part of your overall financial strategy. However, it can often feel intangible, as you’re planning for a future event that you can’t visualise and isn’t relatable to your everyday life.
If this is you, you’re not alone. According to MoneyMarketing, over a third of UK adults are facing a retirement savings shortfall of at least a decade.
Why is this the case? There are several powerful psychological factors that can impact your focus on retirement planning. Read on to discover more about six of these hurdles and how to overcome them.
1. Mental overload
Mental overload is a common problem. You may find your everyday life is filled with decisions: professional, personal, and financial. Dealing with these can often feel like enough, without bringing future complexities into the mix.
But the financial decisions you make on a daily basis are often supported by previous planning. You have enough saved to pay for a holiday, for example, or have already cleared your mortgage.
Reframing the way you think about retirement planning can help. It doesn’t need to be complex, and it’s not something to “solve” in a single conversation.
We’ll work with you to break it down into a manageable process, making it a natural evolution of your existing financial planning. If you’re starting from scratch, we’ll guide you through it step by step.
2. Off-putting jargon
Retirement and pension planning can often feel complicated due to jargon.
This can immediately create a barrier as you feel you have to learn a whole new language before you can even get started.
This is why professional financial planning is important. We’ll help you cut through the noise and explain any relevant terms in a relatable way. We’re always here to help, so please talk to us if anything is unclear.
3. Fear of getting it wrong
A feeling of being powerless and stuck and the fear of making mistakes can often lead to decision paralysis. Overthinking and overwhelm when you’re faced with too many options can leave you feeling like it’s all too much, meaning you go for the “do nothing” option.
Facing the reality of retirement planning is often much less daunting than you might think. Projected income figures can help reassure you that things are moving in the right direction.
We’ll also look at your retirement hopes and aspirations, alongside your income, to bring everything together and create a picture of what your retirement could look like.
Regular reviews can also offer you some reassurance, as we can tweak your plans as we go along. Think of it as a fluid plan that can be adjusted, rather than something that’s set in stone.
4. Worrying about running out of money
You may have already started saving for retirement and be approaching the time when you plan to wind down from work.
But fear of running out of money can often be a big stumbling block for people at the next stage of their retirement planning.
After a lifetime of accumulation, the thought of decumulation – spending your retirement savings – can be daunting. Drawing from your pension pot without replenishing it can be a genuine and understandable worry.
Market volatility and economic instability can also play their part and may lead to you putting off the transition to retirement.
However, getting to grips with the actual figures can often be reassuring. When you work with us on your retirement spending plan, we’ll use cashflow modelling to show you how your wealth could work across a range of scenarios. This can help you see that your retirement plan is feasible without running out of cash.
5. Losing identity and status
Work can play a big part in identity, as well as offering routine and structure. It can be hard to let go of this as a concept, and planning retirement can mean you have to start looking at what your life will be like without your professional role guiding you.
It’s important to balance the financial side of retirement with the emotional aspects. We’ll explore this with you, including how you will continue to bring purpose and fulfilment into your days. Looking at options such as phased retirement could help you ease yourself in without feeling a major loss.
6. Not being in touch with your “future self”
It can be difficult to have a real concept of your “future self”, and this version of you can seem like a stranger. This is why it can often be difficult to make decisions on behalf of this “self” when the present version demands attention which is immediately recognised and rewarded.
Talking to a financial planner can help you bridge this gap between present and future versions of you. We’ll help you establish goals and lifestyle aspirations and conduct your retirement planning based on these aims.
Get in touch
If you’re finding yourself putting off retirement planning for any of these reasons or for another reason entirely, we can help put your mind at ease.
Please get in touch by emailing hello@fingerprintfp.co.uk or calling 03452 100 100.
Please note
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.