Any links will direct to a third-party website and Sovereign IFA Ltd is not responsible for the accuracy of the information contained within linked sites.
According to the Money & Pensions Service, two in five people approaching retirement (55 to 65) have no financial plan for later life.
Unfortunately, retiring without ensuring your finances are in order could increase the risk of running out of money, having to make lifestyle compromises, or needing to return to work.
Indeed, a survey by Which? revealed that many UK adults have retirement regrets, including 1 in 10 saying they retired too early and almost half wishing they had saved more.
Here’s a handy checklist of questions to help you assess your retirement readiness before handing in your notice.
1. What do I want my retirement to look like?
How much money counts as “enough” to retire is different for everyone; it depends on what kind of lifestyle you expect:
- Do you plan to stop working completely, or will you undertake part-time employment or consultancy work?
- How will you spend your time? For example, travelling, volunteering, or caring for grandchildren.
- Where will you live? You might choose to stay in your current home, downsize, move closer to family, or spend part of the year abroad.
Having a clear picture of how you want your retirement to look is an essential first step towards working out whether you’re financially ready to move on to this next chapter of your life.
2. How much income will I need?
Research findings published by Pensions Age show that 63% of UK adults fear running out of money in later life.
You can reduce this risk by making an informed estimate of your income needs and ensuring you have sufficient funds to meet these before you retire.
The Pensions UK Retirement Living Standards provide a useful starting point. They show what retirement could cost based on three levels of spending: minimum, moderate, and comfortable. For example, the estimated annual cost of a moderate retirement is £32,700 for one person and £45,400 for a couple.
You’ll need to adjust these amounts based on your goals and lifestyle expectations. It’s also crucial to factor in your life expectancy because you’ll need sufficient wealth to cover these annual costs for the duration of your retirement.
A financial planner can use cashflow modelling to project your future income needs and assess whether your retirement plan is on track or adjustments are needed to achieve your goals.
3. Am I saving enough?
In May 2026, the Pensions Commission warned that many UK adults – currently 15 million people – are undersaving for retirement.
When it comes to gauging whether you’re saving enough, understanding your retirement income needs (see above) is half the battle.
Next, you need to assess whether your pensions, savings, and investments are likely to fund the lifestyle you want. You might find it helpful to:
- List all your retirement assets – Pensions, ISAs, investment accounts, long-term savings, property, and so on. Then check their current values and projected income; most pension providers and investment platforms will share this information.
- Compare your projected income against your estimated lifestyle costs – This should highlight any potential shortfall you need to address.
- Consider practical steps to fill any gaps – If you’re not on track to achieve the retirement you want, a financial planner can help you identify ways to boost your retirement fund, such as increasing pension contributions or adjusting your investment portfolio’s risk and asset allocation.
4. Could unexpected costs or life events derail my plan?
According to IFA Magazine, three in five UK adults will face a major life event or financial challenge – such as ill health or divorce – which could seriously affect their retirement savings. Moreover, the Which? survey on retirement regrets revealed that almost a third of retirees said that unexpected expenses, such as house repairs, made their finances more difficult.
If you don’t have a financial safety net in place, you could find yourself spending your retirement funds more quickly than you planned.
Instead, build financial resilience by:
- Creating a contingency fund – Set aside at least six months’ worth of essential living costs in an easy-access account. Tailor the amount to your situation – more if you rely on a single income or have health issues, and potentially less if you have a stable guaranteed income and minimal outgoings. Keep this pot of money separate from any other savings and investments to ensure you have a buffer for emergencies.
- Stress-testing your retirement income strategy – A financial planner can use cashflow modelling software to test different “what-if?” scenarios, such as inflation staying higher for longer and needing to fund later-life care. This could help you assess whether your plan can absorb unexpected financial shocks without derailing your lifestyle.
- Planning for big-ticket items or occasions – Think about major costs that are likely to arise during your retirement. For example, contributing to your child’s wedding or house deposit. Build these into your retirement plan and start saving for them now.
Asking yourself these important questions before you retire could ensure you’re financially prepared for the lifestyle you want and reduce the risk of regrets.
Get in touch
If you’re thinking about retiring but you’re not sure if you’re financially ready for this transition, we can help.
Our financial planners will help you review your position and address any shortfalls, allowing you to enter this exciting new chapter of life with confidence.
Email hello@sovereign-ifa.co.uk or call us on 01454 416653 to find out more.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate cashflow planning.
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 performance.
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.
Workplace pensions are regulated by The Pensions Regulator.
Approved by Best Practice IFA Group Ltd on: 20/10/2026