When you think about retirement planning, what challenges come to mind? While ensuring you have enough saved and that you don’t run out of money are common concerns, there is one you may have overlooked: changing from a saving to a spending mindset.

To secure your retirement, putting money away has likely become a habit that you’ve embraced for decades. Perhaps you contributed to a pension, made sure your mortgage was paid off, or invested with a long-term plan. These positive habits could have helped you towards greater flexibility and more security later in life.

However, once you retire, it’s not just your routine that changes – your relationship with money may do too.

Rather than building up assets, you’ll often start to deplete them. You may take an income from your pension and use other assets as well. While a happy retirement is what you’ve made sacrifices for in the past, it can be more difficult than you think to start spending the nest egg you’ve created.

Not switching your mindset could mean that despite efforts during your working life to build the retirement you want, it falls short of expectations, even if you have the finances to reach your goals.

So, how can financial planning help you change your mindset when you retire?

Financial planning can help you understand what lifestyle you want

When you think of financial planning, it’s probably the money side of things that come to mind first, like managing investments or highlighting potential tax allowances. This is an important part of financial planning, but it’s not the whole picture.

Effective financial planning starts with understanding what you want to achieve. For those at retirement, focusing on what you want your lifestyle to look like once you give up work is an essential part of the process. Do you envision yourself travelling the world, retiring by the coast, or spending time on hobbies?

It’s only once you set out your goals that the financial planning process starts to look at how your assets and actions can help you reach them.

A long-term financial plan can give you the confidence to deplete your assets

One of the reasons why retirees are often reluctant to deplete assets is that they worry they’ll run out of money. It’s a sensible concern – the decisions you make at the start of retirement could affect your finances for the rest of your life.

Yet, spending too little during your retirement could mean you miss out on experiences.

A survey from abrdn found that almost half of retirees worry that they’ll run out of money during their lifetime. Despite this, only 1 in 5 people are seeking professional financial advice. A financial plan that’s been tailored to you can give you confidence that you’re financially secure.

A financial plan can help you understand what income is sustainable by considering a range of factors, from longevity to inflation. It can also allow you to voice concerns, such as how you’d cope if investment performance didn’t meet expectations or you needed care later in life, and create a safety net if necessary.

A financial plan will consider the assets you want to leave for loved ones

As well as your own financial security, you may be worried about that of your loved ones. Perhaps you worry that depleting assets now will mean you don’t leave an inheritance to your children or grandchildren.

A lot of people hope to leave money to their family in their will. A financial plan can also ease your mind here. A financial planner can help you understand how the value of your assets could change during your retirement and how to effectively pass on wealth to the next generation.

Contact us to talk about your retirement goals

If you are nearing retirement or have already retired, please get in touch. We can work with you to create a financial plan that suits your goals and gives you the confidence to use the assets you’ve built up during your working life.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The value of your investments (and any income from them) can go down as well as up, which would have an impact on the level of pension benefits available.

Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances. Levels, bases of and reliefs from taxation may change in subsequent Finance Acts.