Imagine you are sat at the hairdressers (guys read barbers if that’s your thing). It’s Saturday morning and there’s a bit of a queue. You read the newspaper/Heat/OK/GQ/What Car? (delete as applicable).  You play on your phone, look around at the kid picking his nose, at the ear hair of the grandma/grandpa accompanying him and you begin to tune in to the conversation going on in the hot seat closest to you:

Hair Management Technician: “Have you got your holidays booked?”
Customer: “Yes I have. It’s pretty much all set.”
HMT: “Really? Where are you heading?”
Customer: “I’m taking the family away for two weeks of sun, sea and sand in August. I can’t wait. I just need to go somewhere warm and sunny. I’ve had enough of this British weather.”
HMT: “You must be going abroad then. Where you going?”
Customer: “I don’t know. I haven’t decided yet. We’ll just turn up at the airport see what we can get for our money. I’m saving nearly £100 per a month towards it. It’s going to be brilliant.”
HMT [Once his/her eyebrows have returned from the ceiling]: “That’ll be nice for you.”

Would that happen? Of course not. No one would fail to plan for something as important as a family holiday. After all it only happens once a year (for most of us). Imagine having to accept the holiday you’re given at the airport rather than the one you want because you failed to plan. You wouldn’t start a journey without knowing where you’re going would you? The reality is this…

You plan where you are going and when you are going. You find out how much it costs. If you think you can afford it you set a budget to fund it. Job done.

If it’s a bit pricey you’ll look to shave a bit off the costs here ans there: 10 days instead of two weeks, further from the beach, smaller apartment, no air conditioning, etc. The fact is you make decisions now about what features you want the holiday to have. If there are affordability issues you prioritise and keep the essentials and lose some (or all) of the “nice to haves”. You then set a budget to fund the holiday. Job done.

This is normal right? For holidays, at least. You’d never accept an accidental holiday (the one you are forced to accept because you didn’t plan to go on the holiday you want).

Do we do the same for retirement? No.

A retirement (usually) only happens once. It’s where you get to spend the time doing the things that are important to you. The things you’ve always wanted to do but never had the time (too busy with work, family, stuff). Yet for many there is no plan for retirement. There is no list of features that are categorised as essential or “nice to have” in retirement. No priorities are assigned (nor costs for that matter). Like spending time with grandchildren (quite cheap), driving Route 66 (one off large expense), learning the piano (regular payments – how good do you want to be?), buying a camper van and travelling the UK (expensive initially and who knows how much thereafter). You get the idea.

If there’s no comprehension of what retirement will cost – it follows that there can be no way of knowing what retirement income will be required to fund it. So people arrive at retirement thinking it’s a destination and are then forced to live out the rest of their retirement constrained by the retirement income they are given – the one based on their pension. 

We’ve all seen it: “Pensions are rubbish. I’ve saved into a pension for 30 years and now I’ve stopped work I can’t afford to do anything”. Did they ever think to check what the cost of their retirment would be? Or whether their contributions had any chance of meeting their expectations? No. They got what they were given (and weren’t that impressed as it happens).

It doesn’t have to be like this.

It’s much better to realise that retirement is the start of a journey, not a destination. In fact it’s your final journey.  It’s when you should be spending time doing the things that are important to you. Take time to plan it and avoid accidental outcomes – the ones you are forced to accept because you didn’t have a plan of how get to where you wanted to go. The bigger your time horizon the more flexibility you’ve got – and the more chance of achieving your goals.

Retirement is a bit like a holiday so why not start planning it like the holiday of a lifetime today? Afterall once you get to retirement it’s where you’re going to be spending the rest of your life.