Preparing for retirement is likely one of the most important goals when creating a financial plan. By planning ahead and building wealth effectively, and then considering how you draw from your savings, you can achieve your dream lifestyle in your later years.
However, the 2025 Retirement Report from Scottish Widows revealed some concerning data about how prepared the average person is.
The findings showed that 39% of people will fall short of even a basic standard of living in retirement.
Hopefully, you won’t be part of this group and will likely be able to afford your basic living costs. Yet, the statistics do demonstrate that many savers might struggle to achieve all their goals in retirement due to financial constraints.
The data in the recent Scottish Widows report highlights some of the common challenges and areas where you might need to make improvements.
If you plan ahead and follow some important steps, you can build adequate savings and realise your dream retirement.
Here are four top tips to help you save for retirement and the statistics to give you the motivation.
1. Set clear goals for later life – Only 27% of people prioritise saving for retirement
To save for the future successfully, you need a clear goal to aim for. Despite this, only 27% of people listed preparing for retirement as their number one savings goal.
Instead:
- 41% focus on their emergency fund first
- 28% prioritise saving for a holiday.
Other goals include saving for a large purchase or building wealth to support children.
Not having a clear goal of saving for later life could make it more difficult to stay motivated and build the wealth you need for retirement. This is why our financial planners will encourage you to think in more detail about the kind of lifestyle you want to lead in your later years.
For instance, if you consider your travel plans, where you want to live, and what kind of social activities you want to engage in, you can build a picture of your dream retirement.
2. Work out how much you’ll need – A comfortable retirement is estimated to cost £60,800 a year for a couple
Deciding on the kind of retirement you want is the first step. You’ll then need to consider what level of savings you require to make your vision a reality when you eventually finish working.
The Scottish Widows report contains estimates about how much it might cost to maintain a certain quality of life in retirement. The figures suggest that a couple may spend £60,800 a year to achieve a “comfortable” retirement.
Since these figures are based on general estimates, the exact amount you’ll need to save will likely differ.
You can determine your own savings target by considering your annual expenses for:
- Mortgage or rent payments
- Utility bills
- Travel costs (including the cost of owning a car)
- Socialising and eating out
- Financially supporting family members.
This should give you a general idea of how much you’re likely to spend each year. By thinking about when you want to retire and what your average life expectancy could be, you should arrive at an approximate savings goal.
We can help you make these calculations, and use cashflow planning tools to help you visualise your financial future.
3. Understand what savings you currently have – There are an estimated 3.3 million lost pension pots with an average value of £9,470
Reviewing your current savings shows you how close you are to achieving your dream retirement. It’s also important to understand where you hold your wealth and when you will be able to access it.
Statistics from Scottish Widows suggest that you might be overlooking certain savings. In the UK, there are an estimated 3.3 million lost pension pots, with an average value of £9,470.
As an expat, it’s easy to lose track of savings.
It’s easy to forget about old savings, so you may want to spend some time tracking down any lost pots.
As well as helping you find your savings, we can discuss options for consolidating different pension pots, if necessary.
Read more: Pros and cons of combining your pension pots. Is it the best move for you?
Alongside your pensions, you may have wealth in other sources, including your:
- Tax-efficient savings
- General Investment Accounts (GIAs)
- Regular savings accounts
- Property.
Totalling up all your assets gives you a clear idea of your progress towards your retirement savings goal.
You might discover that you’re on track but you could find that you have a shortfall in your savings.
4. Make up any shortfalls in your savings – 35% of savers contributing more than the default amount to their pension will achieve a comfortable retirement
It might be disheartening to discover that you have a shortfall in your retirement savings. However, by making some minor changes, you could improve your position, meaning you won’t have to make sacrifices to your lifestyle in retirement.
Indeed, Scottish Widows reports that 35% of savers who contribute more than the default amount to their pension will achieve a comfortable retirement. This is compared with just 14% of those paying the minimum amount.
We can use cashflow planning to help you review your pension contributions. The forecasts will show how much you’re likely to have in your pensions at your chosen retirement age, based on your current contributions.
If necessary, we’ll discuss ways to increase the amount you save each month.
Beyond this, finding small ways to reduce your spending could mean you have more disposable income to boost your savings.
For example, you might consider:
- Reviewing your spending habits
- Cancelling unused subscriptions
- Switching providers for utility bills.
Any cutbacks you make could allow you to maximise the amount you pay into your pension and other savings each month.
Get in touch
If you’re concerned about saving for your dream retirement, we can support you.
Email enquiries@alexanderpeter.com or give us a call on +44 1689 493455.
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.
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.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
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