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Is Retirement within reach? How to sense check your plan

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As you move through your mid-50s, retirement often starts to feel much closer. What once felt like a distant milestone can quickly become something that you are actively planning for in the near future.

At this stage, a simple but important question tends to surface – can I actually afford to retire?

There is no single answer, but there is a clear and structured way to begin thinking about it. In most cases, it comes down to understanding three key things:

  1. The level of income you would need to support the life you want
  2. The income you are on track to have – what your current savings are likely to provide
  3. How long your money may need to last

Once you have a view on these, the bigger picture becomes far easier to piece together. It allows you to start with what really matters – the life you want your money to support and then work backwards from there.

Step 1: Start with the life you want

It is natural to start looking at your pension value but in reality, it is often more helpful to begin with something more personal, the lifestyle you would like your money to support.

The Pensions and Lifetime Savings Association (PLSA) Retirement Living Standards can offer a useful starting point.-  

These are not targets you must meet but they can help shape your thinking. Your own figure may differ depending on your goals and circumstances. Things like whether you still have a mortgage, family commitments or specific plans will all make a difference.

With a rough target in mind, you can begin to sense check whether your finances are aligned with that goal.

Step 2: Understand what you’re on track to have

The next step is to build a clear view of the income your existing assets may provide.

Start with your State Pension. The full new State Pension is currently expected to be around £12,546 a year. For most people, this forms only a part of their overall income in retirement. It is worth taking a few minutes to check:-         

  1. Whether you are on track to receive the full amount
  2. When your state pension is due to start
  3. How much of your target income it will cover

This helps you understand how much will need to come from your own savings.

A helpful way to approach this is to work backwards. Rather than focusing first on the size of your pension, start with the income you would like to draw each year and ask what level of savings might support that.

As a broad guide, many financial planners assume that withdrawing between 3 to 3.5% of a portfolio each year can provide a reasonable balance between income and long-term sustainability. While this is not a fixed rule, it does give a helpful frame of reference. However, sustainability of withdrawals is highly dependent on individual circumstances. 

In practical terms, supporting an income of around £31,000 a year, may require a pension pot somewhere in the region of £800,000 to £1 million. Where you fall in that range depends on who cautious you want to be, how your investments are structured and how long the money needs to last.

The key point is not the exact number but the relationship between income and capital. Even small changes in the level of income you plan to take can have a significant impact on the size of the pot required.

Step 3: Bring it together and sense check

This is where everything comes together.

It can help to look at your finances in one place, including:

Many people have built up savings across multiple providers over time. Bringing these together often gives a much clearer picture rather than looking at each in isolation.

There are also a few important areas to consider at this stage.

Bridging the gap before your state pension

If you are planning to retire before your State Pension begins, your own savings will need to cover those earlier years.

How long your money may need to last?

Time plays a significant role in any retirement plan.
It is common to plan for 20-30 years in retirement, and often longer. Looking at different scenarios, for example, living to age 85 or 95 can help you understand how resilient your plan is.

This type of thinking often highlights where small adjustments today could make a meaningful difference over time.

Making the most of the next few years

The years leading up to retirement are still a valuable opportunity to make improvements. Some practical steps that can have a real impact include:        

These are all relatively straightforward actions, but they can significantly improve both clarity and outcomes.

Bringing it all together

At its core, retirement planning is about confidence. It is about being able to answer questions such as:

Having a clear, consolidated view of your finances can make those answers easier to find.

A final thought

It is very common to find a gap between where you are today and where you would like to be. The good news is that, even within five years of retirement, there are still options. You may be able to increase contributions, revisit your timing or adjust your expectations in a way that still delivers a fulfilling outcome. Taking the time now to understand your position can turn uncertainty into a clear plan and help you move towards retirement with greater confidence.