Why you need to plan for your retirementEveryone looks forward to retirement. The time when you can forget about the nine-to-five grind, spend more time with grandchildren and take up new hobbies.

But unless you plan your finances accordingly, you may find your hopes for a happy and fulfilling retirement are out of reach when the time comes.

Planning for your retirement is about more than your pensions and savings. You need to think about the lifestyle you want and work out the best way to pay for it. And, ideally, it   should start long before you think about giving up work.

The first aspect to think about is how much money you’ll have to spend in retirement – your expenditure. And this is tied in with the kind of lifestyle you’d like. For instance, you may want to take an extra holiday every year or join a golf club. Your household bills may increase because you’re spending more time at home. On the other hand, you may see some expenditure reduce – like your work travel costs.

Then you need to look at the potential income you’ll have to cover outgoings. This includes your personal and company pensions, your state pension, the equity in your property, and any savings or investments you may have.

It also involves working out the most tax efficient way of using your capital – for instance, can you invest your savings more effectively? Or, you may want to take a percentage of your pension as a lump sum, if you have ant debts to pay off perhaps.

If you find your expenditure is likely to be higher than your income, you’ll have to find ways to bridge the gap. This might involve looking at ways to cut back what you’ll spend or paying more into a pension while you’re still working.

Planning for retirement is becoming increasingly important, because we’ve never had so much choice over how we use our retirement savings. But that choice means there are more decisions to make, which can be a daunting prospect. Particularly as poor choices are costly and, often, irreversible.

So, even if you’re still some way off retiring, it’s worth getting in touch with a financial advisor. They can help explain how you can prepare for your retirement and help you make the best use of your money. To give you peace of mind as you look forward to your retirement.