Planning my retirement and expenses


Planning my retirement income and expenses

‘A goal without a plan is just a wish.’ This well-known quote about having a goal by the French writer, Antoine De Saint-Exupéry, is also perfect advice for anyone who is thinking about planning for their retirement or aiming to retire early.

It’s easy to imagine that because you’ve got a pension, you’ve done everything you need to get your retirement sorted. But the truth is there’s a great deal more you can do to plan a comfortable retirement.

Of course, it’s great to have a retirement plan, but it’s just as important to have a well-thought-out financial plan that will help you achieve it.’

To do that you’ll need to look at some cash flow numbers that include your outgoings and expenses, the value of your pension pot and any income you might receive from other sources.

Why work out a budget?

Unless you’ve got a good idea of what you’ll be spending and what income you’ll have, it’s difficult to know whether your funds will stretch far enough. Don’t forget, your retirement income needs to be able to last for the rest of your life, potentially up to 30 years.

Planning my retirement income and expense infographic

So the starting point is to put together a more detailed budget that includes all your outgoings and incomings.

Your outgoings will include essential things like utilities and food, as well as non-essentials like travel or hobbies. Your income might include money from your pension and any other savings, investments or state benefits. Here’s a list of the kind of figures you’ll need. Obviously, we all spend money on different things according to our needs, so this is just a typical example to help you:

  • Housing (mortgage or rent payments)
  • Food
  • Utilities (gas, electricity, telephone, water etc.)
  • Transport (cars and public transport)
  • Insurance
  • Debt payments (credit cards and loans)
  • Entertainment and leisure
  • Travel and holidays
  • Hobbies

Working out a retirement timeline

It’s a good idea to work out a timeline for your retirement income. That way, you’ll have a better idea of how long your money will need to last and what living standard that will give you.

So here’s some questions to ask yourself:

  • What’s your objective for your retirement?
  • Do you plan to retire at 55?
  • Would you prefer to carry on working?
  • What about your dependents? How long will you need to support them for?
  • Do you run a business? What’s your plan for that?
  • How is your health? Are you likely to need long-term care at some point in the future?

All of these have a part to play in shaping the timeline for your financial plan and will have an impact on how much income you’ll need.

Estimating my future pension income

Have you got any idea of how much money you will have coming in when you retire? It’s a question most of us would struggle to answer.

If you’re not sure what your pension pot is currently worth, start by getting a current pension statement from your provider.

Once you’ve got that, put it into an online pension calculator. This will give you a forecast of what your likely income will be and whether you’ve got a shortfall.

Don’t forget that you can withdraw 25% of your pot tax free either as a lump sum, or as chunks, of which 25% of each sum is tax free. The rest can be used to either buy an annuity which will give you a guaranteed income, or one of the other pension income options.

But what if you find out that at your current level of contributions, your personal pension won’t let you afford to retire in comfort? At least you have found this out now, rather than when it’s too late. You might decide to start paying more into your pension while you’re still earning. Alternatively, you could look into other ways of funding your retirement.

Part of your income could also be from any investments or other retirement savings you’ve got. Again, get up-to-date statements for all of these for your calculations.

Next, find out if you’re entitled to any state benefits. The government website has a good list of online calculators that take just minutes to fill in and will help you carry out a quick check.

Man on bike

Claiming my state pension

When you reach state retirement age, you’ll also be entitled to claim your state pension. As of 6 April 2020, the full state pension rose to £175.20 a week. The amount you’ll receive is affected by your National Insurance contribution record, and this figure is based upon 35 full years of National Insurance contributions.

The state pension age is often under review by successive governments, which tends to make it a bit of a moving target. However, it’s worth knowing that it’s currently set at age 66 as of October 2020. The state pension age is scheduled to rise again to 67 between 2026 and 2028, and then go up again to age 68 between 2037 and 2039.

So it’s definitely something to factor into your calculations, and keep an eye on as you approach your planned retirement age.

You can calculate your state pension age online and see what amount you’d be likely to receive.

If you haven’t paid enough National Insurance contributions you may have gaps in your record which could mean you won’t get the full standard state pension. You can check your record online and if you find you have gaps, you may decide to make voluntary contributions while you’re still working.

Tracking down old pensions

Something else to include in your calculations is the income you may receive from any other pensions you may have. Perhaps you have old workplace pensions that you paid into at a previous workplace and then forgot about. They all have a value and need adding into your calculations.

To get a statement from each provider you’ll need your plan details, including the number, the date you started paying into it and your National Insurance number.

If you’ve moved jobs and addresses a few times, it’s not unusual to lose track of these old pension schemes. The government pension service’s online Pension Tracing Service is one way to track them down again.

Other things to consider

Some of the other factors you should also include in your plan:

  • Are you currently struggling financially? Do you have debts? All of these could be warning signs that you need to keep working.
  • Have your dependants got financial plans or will you need to support them financially?
  • Have you factored in the potential for lifestyle changes such as maybe needing care or simply living longer?
  • Have you got some breathing space in your calculations? An emergency fund for ‘just in case’?
  • Have you got a ‘returning to earning’ plan just in case your finances need a boost in the future?
  • Have you talked your plans through with an Independent Financial Adviser or certified financial planner? Although there’s a cost involved, it could be money well spent and could help you avoid making any costly mistakes with your pension pot.

What’s next?

Now that you’ve got a good idea of how to work out your likely income and expenses when you retire, why not find out more about how to look after your loved ones in retirement?


The information on this page was sourced between June - October 2020. Information on this site does not constitute any form of advice, representation, or arrangement by us and you take full responsibility for making (or refraining from making) any specific investment or other decisions. You should take independent financial advice from an adviser who is registered by the Financial Conduct Authority.


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At Yorkshire Building Society we created Our Money Movement because we could see how most of the information for people approaching retirement was overly complex and full of jargon and hidden charges. Our aim is simple. To provide plain, straight talking guidance to help you make informed decisions about your financial future.