When your latest private pension statement arrives on your doorstep (or drops into your app), you’ll see a series of figures that reflect the value of your pension in pounds and pence. It can seem like an impressive display of your potential ‘wealth’.
So, how do you interpret these figures?
With the government planning to charge inheritance tax on pensions from 2027, it’s easy to see why for many, their perception of their hard-earned pension shifts from retirement fund to being an asset which can be passed on.
Why pensions should not be viewed as assets
As comms consultant Simon Grover of Quiet Room suggests:
“When we reduce pensions to investment vehicles … we obscure their essential role in creating a stable, dignified society. A pension isn’t just a number in an account … it’s about maintaining independence, staying connected with friends and family, and continuing to participate fully in society.”
Needless to say, I very much agree with this view. I spend a great deal of time talking with clients who fixate on the figures and forget to think about what they will actually spend their pension money on – living and enjoying their retirement.
What can be worse is that you take the figures on the statements in their raw form as the only option. You don’t see the potential for making the pension fund work with your retirement lifestyle.
The inheritance factor
The same applies to those who want to “leave something for the grandchildren”, and as a result focus more on their legacy than their own lifestyle for the next 30+ years. Simon Grover again:
“When pensions become vehicles for wealth transfer, we risk forgetting their fundamental purpose: ensuring dignity in later life.”
Dignity isn’t a word I normally associate with retirement, but it is very important. On retirement, we move from a defined job title or professional position – company CEO, head teacher, electrical engineer – to being a “retiree”. Retirees can lose a big chunk of self-identity (dignity even), without doing much more than stepping away from their full-time work.
What do you do all day?
When we’re working, it can be hard to figure out what we actually want to do in retirement. Often, we just think of the opportunity to do more of what we don’t have time to do except at weekends.
However, unless we make plans for what we want to achieve, to enjoy, and participate in, retirement can quickly become an endless series of weekends with nothing much to fill them. This can become depressing, (See this blog)
Depression and retirement timings
It can get worse the longer you wait to retire, according to a paper on the “Association Between Retirement Age and Incidence of Depressive Disorders”:
“The incidence of depression peaked around retirement, followed by a decrease post-retirement. Retiring between the ages of 65–69 increased the risk of depressive disorders compared to retiring between 60 and 64.”
Retirement planning gives your 30+ years of retirement a defined structure, purpose and makes it fulfilling and enjoyable for you, your partner and your family. However, it can be hard to formulate a plan on your own. As a retirement coach, I can help you create a retirement game plan to follow that can deliver a rich and fulfilling retirement.
Planning to plan
I offer a free initial 30-minute Discovery session to discuss your own situation, your retirement dreams, and your timescales. There’s no obligation, just the chance to talk, and access my years of experience in retirement planning for help and guidance.
