Saving for retirement: why everyone needs a plan

The fundamentals of saving for retirement are simple, and an adviser can help with decisions along the way – Tony Clark, Senior Propositions Manager at St. James’s Place, shares his top tips.


  • Retirement and the way we save for it has changed beyond recognition in recent decades.
  • Responsibility for ensuring we have a decent income in later life now lies firmly with the individual – no one else will do it for us.
  • That responsibility also gives us more control, however, so we all need to put together a plan that reflects our own needs and goals.
  • The fundamentals of saving for retirement are simple. But with decisions to make along the way, the help of an expert adviser can be invaluable.


When today’s pensioners started out on their working lives, the idea that their retirement would last up to a decade or even more was far-fetched. So too was the thought of taking responsibility for their own pension savings. Both of those things have changed.

A man aged 65 now can expect to live for another 20 years, on average – a fifth of their total lifespan – while a 65-year-old woman typically has 22 years ahead of her,according to the Office for National Statistics (ONS).[1]

With life expectancy continuing to rise, those working now will typically need their savings to last a long time. They will also need to take a more active role in building up those savings than previous generations had to.

That’s largely because the generous defined benefit (or final salary) pensions that many of today’s retirees could rely on are a rarity for those working now. Instead, those in their 40s and 50s are likely to have a mix of defined benefit and defined contribution schemes, which will complicate planning for retirement. Those in their 20s and 30s are likely to only have defined contribution schemes. This means that it’s their responsibility to save enough for retirement, but they have more control over the investments they make.

Whilst all this might sound daunting, it doesn’t need to be.

For all the jargon in pensions and some of the complexities surrounding them, the most important steps are actually very straightforward. So here’s a quick guide to making the most of your retirement savings:


  1. Work out how much you need 

Previously, the way that pensions and retirement worked meant there wasn’t much planning to do. Now, however, it’s less about age and more about planning for objectives.

“These days you’re saving for a purpose, with an end goal in mind,” says Tony Clark, Senior propositions Manager at St. James’s Place. “If you work backwards from retirement, that helps with working out what you need to do.”

It can be hard to know exactly how much you need to have saved by the time you decide to give up work, but a ‘ballpark’ figure can help (and don’t be put off by the number). One option is to think in terms of having saved multiples of your salary by certain ages, or a percentage of your earnings.


  1. Take advantage of your workplace pension 

For many people, the pension journey starts with paying into a company scheme. These days, employees are automatically enrolled into a pension scheme, offering the perfect foundation to build on, says Clark.

But to really get the most from your workplace pension, it’s worth spending some time on it. Start by checking how much you’re putting in, whether you can afford to put in more and, crucially, how much more your employer would pay in if you increased your contributions.

“If you can afford to contribute more, see if there’s a trigger point at which your employer doesn’t just match your contributions but goes even further, because that can make a huge difference to how much your pension can grow,” says Clark. “If they do pay more, take advantage of it.”


  1. Think about how your money is invested 

Your workplace pension may well be invested automatically into a ‘default’ fund unless you made an active choice otherwise. But while pensions are for the long-term and regular tinkering isn’t advisable, it’s still important that it’s invested in a way that’s right for you.

“We all have different plans, attitudes to risk and objectives, so look at what funds are available, get some advice and see whether or not your pension is invested where you want it,” says Clark. “That pension is your money and your future, so own it, have a look at it and lift up the bonnet.”

Remember too that even small regular contributions can add up rapidly over time. That’s because of the magic of compounding – the snowballing effect that happens when the profit generated by your investments goes on to generate its own growth.


  1. Give yourself more options 

Pensions are just one way of saving for retirement. But there’s nothing to stop you from also saving into a Stocks & Shares ISA, Clark points out. Using both a pension and an ISA is in many ways a better approach than saving into just one or the other, because it gives you instant diversification – the golden rule of investment.

“Having an ISA as well as a pension gives you more options – and the retirement of the future is all about options,” he says.


  1. Keep track of your journey 

Our objectives, circumstances and our risk appetites change over time, so it’s worth reviewing, perhaps once a year, what you’re paying into your pension and where the money is going.

“It’s easy to focus on the here and now but be mindful of what your income needs will be in older age,” Clark suggests.

“For example, make a mental note to review your contributions every time you have a pay rise. If you don’t feel you can afford to pay in more at that point, that’s OK. Just keep it in mind as your situation might change in a few months’ time.”


  1. Get advice 

Retirement has changed, as has the journey we take to get there. “The fundamental difference is that there is no one-size-fits all anymore – everyone’s retirement will be different, so everyone needs a plan,” says Clark.

“As we all have different views and objectives, it can make a huge difference to work with an impartial, expert adviser who can map out a plan with you and help you keep it on track.

With the time you’ve got available to save, a little advice will go a long way.”

The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up.   You may get back less than you invested. An investment in equities does not provide the security of capital associated with a deposit account with a bank or building society.