Planning for Retirement: How to Build a Future You Can Look Forward To

Retirement might seem like a distant milestone — especially if you’re in your 20s, 30s or even 40s — but planning for it early can make the difference between just getting by and enjoying real financial freedom later in life. With rising life expectancy and changes to workplace pensions, taking control of your retirement planning is more important than ever.

This guide explains how pensions work in the UK, what your options are, and what steps you can take now — whatever your age — to build a comfortable retirement.

What Is Retirement Planning?

Retirement planning is the process of making sure you’ll have enough income to support yourself once you stop working. That might mean funding your lifestyle with a combination of:

• Workplace pensions

• The State Pension

• Private pensions or investments

• Property income

• Savings

The key is to ensure your income in later life matches the kind of lifestyle you want — whether that’s a simple, secure life or one filled with travel, hobbies, and leisure.

The State Pension

The State Pension is the government’s regular payment to people who have reached State Pension age, which is currently 66 (rising to 67 by 2028).

To qualify, you need at least 10 years of National Insurance contributions, with 35 years needed for the full amount. As of 2025, the full new State Pension is approximately £221 per week (£11,500 a year) — enough to cover basic costs, but not to live comfortably on its own.

You can check your forecast and contribution record on the GOV.UK website.

Workplace Pensions

Since auto-enrolment was introduced in 2012, most UK workers are now enrolled in a workplace pension by default. Here’s how it works:

• You contribute a percentage of your salary (usually 5%)

• Your employer contributes too (at least 3%)

• The government adds tax relief

These contributions go into a pension pot, which is invested on your behalf and grows over time. The earlier you start, the more you benefit from compound growth — where your investments earn returns on top of returns.

You can’t usually access this money until age 55 (rising to 57 from 2028), at which point you can take 25% tax-free and use the rest for income (e.g. through an annuity or drawdown).

Personal Pensions and SIPPs

If you’re self-employed or want more control over your retirement savings, you can set up a personal pension or a SIPP (Self-Invested Personal Pension). These offer:

• Flexible investment choices

• Tax relief on contributions (20% for basic rate taxpayers, more for higher earners)

• Control over how and where your money is invested

You can open a SIPP through providers like AJ Bell, Hargreaves Lansdown, or PensionBee, and manage it entirely online.

How Much Do You Need to Retire?

The amount you’ll need depends on your lifestyle goals. The Pensions and Lifetime Savings Association (PLSA) provides a useful benchmark:

These estimates include everyday expenses, holidays, and some luxuries. To reach a “comfortable” retirement, you’ll likely need a combination of workplace and private pensions, alongside other savings or assets.

Tips for Boosting Your Pension

1. Start Early

Even small contributions made early can grow significantly over time. A 25-year-old contributing £100/month has more growth potential than someone starting at 45 with £250/month.

2. Increase Contributions

If you get a pay rise, consider boosting your pension payments. Some employers offer contribution matching beyond the minimum.

3. Consolidate Old Pensions

If you’ve worked multiple jobs, you might have several small pension pots. Combining them can simplify things and may reduce fees.

4. Claim Your Tax Relief

Basic rate relief is usually added automatically, but higher earners may need to claim additional relief via Self Assessment.

5. Keep an Eye on Fees

Investment and management charges can eat into your returns. Look for providers with transparent, low-cost fee structures.

6. Review Your Investments

Most pension funds are invested in stocks, bonds, and other assets. Make sure your portfolio reflects your risk appetite and retirement timeline.

What About Property?

Some people prefer to invest in property as a retirement plan — through buy-to-let income or selling a main home to downsize later. This can be effective, but property also comes with:

• Maintenance and management issues

• Tax on rental income and capital gains

• Less flexibility than liquid investments

It’s best seen as a complement to, not a replacement for, a pension.

Planning for Life After Retirement

Retirement planning doesn’t end when you stop working. You’ll still need to manage your money, possibly for 20–30 years or more. Think about:

• How you’ll draw income: Regular withdrawals, annuities, or a mix

• Inflation protection: Your needs may rise as prices go up

• Health and care costs: Especially later in life

• Inheritance planning: Consider how your remaining assets will be passed on