Josie Anderson, 66, retired community worker
“I would tell younger people that they need to start planning for their financial future in their 20s and 30s. It’s too late when you are 10 years from retirement.
“For the last 10 years before I retired I worked part time in the community and then as a college lecturer. I would have had a bigger pension if I had been in full-time work, but then I would have missed out on the experiences that I enjoyed.
“My generation has been lucky in terms of having free schooling, the NHS, and a state pension, and all those things are disappearing for younger people.
“I would tell younger people to plan financially for their future, but also to be aware that things happen that you cannot plan for – death, illness and divorce. That’s why it is important to live for today and follow your dreams while you have the youth and energy to do so.”
Philip Pearson, chartered financial planner and director of P&P Invest, an independent financial adviser firm in Southampton, reviews Josie’s tips.
Pearson says: “Josie is right that many of the benefits enjoyed by people retiring now or already retired may not be around for the younger generation. That’s why it is important to plan financially for your retirement – in terms of pension contributions, but also thinking holistically about what other investments you might have. This could be bonds, shares, funds or property.
“The earlier you start to plan for your retirement, the better. Contributions to a pension made in your 20s and 30s have three or four decades to grow into a fund which needs to support you when you retire.”
In addition, he says it is important to pay off debt early in life if you do benefit from a legacy or other lump sum, and to have emergency savings that you can use in the event of illness, divorce or bereavement. This can be kept separately in a savings account and should be at least three months’ worth of salary or monthly outgoings.
Mike Dixon, 74, retired university lecturer
“Enjoying retirement is a state of mind, and I try to see each part of my life as a new door opening as another one closes. Rather than seeing retirement as the end of a career, I viewed it as the start of an interesting new phase in my life.
“I would tell my younger self that choosing the right job and enjoying it is important. University teaching was the right route for me. I enjoyed my career and was fortunate enough to have a generous pension plan that has given me financial security in later life. My wife, Judy, and I are not extravagant spenders, but a good pension fund has enabled us to live comfortably in retirement.
“For some people, it’s hard to leave behind their job because it is all bound up with their self-esteem and sense of worth. You need to look beyond your former career and make the most of the new opportunities that retirement brings – and having a secure pension is an important part of that.”
Pearson says: “Final salary schemes are disappearing from many workplaces and there is now much more responsibility on people to fund their own retirement schemes. Auto-enrolment [which requires all employers to put certain staff into a pension scheme] is a government initiative to encourage more people to participate in pension schemes at work.
“It makes good financial sense to join a pension scheme at work if you have the opportunity as your employer is likely to be making a contribution on your behalf. If not, set up your own pension if you are self-employed. The earlier you start to plan for your retirement, the better.”
Juan Moore, 72, retired headteacher
“Money means nothing unless you have your health, so it is important to appreciate what you have got and make the most of the opportunities that you have when they arise.
“I had to retire from being headmaster at 55 because of illness, after a teaching career spanning 35 years. I had my first headship at just 29.
“For me, having an income protection scheme in place was a great help because it paid out for five years until my original projected retirement date, which was 60.
“You can plan for the future, but unexpected events can scupper your plans. You might end up being alone, if your spouse dies, and you can’t always be sure of what the future holds.
“That’s why we use the money we have to go on holidays and help our family. It’s important to keep active and to take the opportunity to travel and to do and see new things. There are simple things that we spend our money on now which give both me and my wife great pleasure – such as being members of the local art club, and going on the occasional cruise holiday.”
Pearson says: “Income protection policies may be suitable for some people, and anyone who has a mortgage or dependents should take out life insurance, which pays out in the event of your death.
“Careful financial planning gives you security in retirement and the freedom to pursue dreams like travel and hobbies, which you might not have had time to do when you were in full-time work.”
He says it is a good idea to get into good financial habits early in life – setting aside some money every month to pay for holidays and thinking of more long-term savings such as opening an Individual Savings Account (Isa) where your money can grow tax-free.
Lloyds Bank can help you see the bigger picture
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