How to retire when you want to

Whether you want to stop working, go part-time or start a new venture in later life, putting a plan in place now will help you meet your goals.

While much has changed since it was introduced in 1948, the State Pension age – currently 66 for both sexes – continues to shape the way we approach retirement.

Lifestyles, the nature of work, life expectancy and healthcare have evolved beyond recognition since then, while the default retirement age was scrapped in 2011.

Changes to pension rules in 2015 also gave people much greater freedom when it came to accessing and using their pension savings.

For many people, however, the State Pension age still dictates how they think about and plan for retirement.

While it can be useful to have a target, the idea of reaching a specific age and immediately entering full retirement is outdated and often unhelpful, says Tony Clark, Senior Propositions Manager at St James’s Place.

“We’re trying to move away from that idea of retiring at a certain age, and towards a point where it’s about when you feel ready to make some changes,” he explains.

Drawing out the phase

With retirement no longer a one-off event for many, it’s now up to individuals to decide when they wish to retire and what they want the following years to be like. It’s more important than ever to plan well in advance – after all, your post-work life could last for several decades.

“Getting away from the nominal age helps you to shift your mindset and think about what retirement means for you,” says Tony. “You might reach a point in your planning where you’re ready to slow things down at an earlier age than you might have expected.”

If you’d like to take control of your retirement – whether it’s several decades away or rapidly approaching – the first step is to develop an idea of what you want.

These days, retirement might be about stopping work as early as you can or reducing your hours and continuing in some form of work for as long as you’re able to.

You might have post-retirement goals to aim for, a certain amount of money you want to leave for your beneficiaries or a new venture to start.

Or you might simply want the peace of mind of ensuring you’ll never run out of money during retirement, no matter what age you finish work.

“For many people, later life is about getting time back. You’re investing now to have the time to do what you want later, whether it’s running a business, working, volunteering, leisure or a mix of things,” says Tony.

The next step is to sit down with a financial adviser and identify what you need to do for your goals to become reality. Then review your financial plan and keep coming back to it to check if it still serves your purpose.

“Having a plan in place gives you the confidence to know that you can adapt as you need to and feel in control,” says Tony.

It’s not a race

For many people, the main aim is to make retirement happen as soon as possible. But this is different for everyone – some people think about their 50s as the start of their retirement years, whereas for others it will be their 70s.

It’s important to work out whether you really want to get there quicker or if it’s more about quality of retirement, regardless of how and when it happens. You may need an extra couple of years to achieve your plans, rather than having to take more risk to get there sooner.

“You might aim for 60 but realise then that you haven’t saved enough, or decide you want to work for longer – so think about what ‘good’ looks like to you,” says Tony.

The plan you put together will be a broad one, with an investment-risk approach geared towards your own needs and objectives, as well as other elements that ensure you can maintain your pension contributions.

They will likely include Income Protection and perhaps Critical Illness Cover – forms of protection insurance that help you meet your financial needs in the event of being unable to work due to a serious illness, ongoing health difficulties or an accident.

This underlines the extent to which building a plan for retirement isn’t just to provide for you later in life, but also to give you peace of mind and support your wellbeing in the short term.

Looking ahead with confidence

The idea of phasing gradually into retirement is increasingly common. More people are reducing the reliance on their earnings over time and making a shift towards drawing on their pension assets. This might occur over the course of a year or over several years, Tony points out.

“We already see it now and it will become a normal approach to retirement,” he says.

“The value of advice is in helping you imagine what later life might look like, identifying the potential or the opportunities and pulling it all together in a plan that can then be put in place.”

Learn more about the value of financial advice as you plan for your retirement.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

Sovereign Wealth Hong Kong is a Partner Practice of St. James’s Place (Hong Kong) Limited

The ‘St. James’s Place Partnership’ and the titles ‘Partner’ and ‘Partner Practice’ are marketing terms used to describe St. James’s Place representatives.

Members of the St. James’s Place Partnership in Hong Kong represent St. James’s Place (Hong Kong) Limited, which is an insurance broker company licensed with the Insurance Authority (Licence No. FB1075), a licensed corporation with the Securities and Futures Commission (CE No. AAV439) and registered as an MPF Intermediary (Registration No. IC000852).