Are You Asking The Right Questions?
When people think about retirement, one question usually comes to mind: “How much do I need in my pension?“
It’s an important question, but might not be the most useful one. A better place to start is to ask: “How much income will I need each month to enjoy the retirement I want?”
After all, your pension isn’t there to give you a number on a statemen… It’s there to provide an income that supports the lifestyle you’ve worked hard to achieve for many years after you stopped working.
What Does Your Ideal Retirement Look Like?
Imagine two people: John and Mary, both aged 45 and paying into their pensions every month.
John is focused on building the biggest pension fund possible, whereas Mary starts with a different question.
“What do I want my retirement to look like?”
She imagines taking two holidays each year, enjoying weekends away, spending time with family, helping her grandchildren where she can and having the freedom to enjoy her hobbies without worrying about money.
Once she understands the lifestyle she wants, it becomes much easier to estimate the income she’ll need to support it.
Start With Monthly Income
Rather than focusing on one large pension figure, think about the amount you would like arriving in your bank account each month.
Breaking retirement into a monthly income makes planning much more practical.
It also makes it easier to understand whether you’re on track to achieve the retirement lifestyle you want.
Your Expenses Will Change
One of the biggest misconceptions about retirement is that your expenses simply disappear.
In reality, they change.
Some costs may reduce, including:
- Commuting.
- Work clothing.
- Pension contributions.
But other expenses may stay the same—or even increase.
These might include:
- Household bills.
- Healthcare.
- Travel.
- Leisure activities.
Planning for these changes can help you build a more realistic picture of the income you’ll need in retirement.
What Could Retirement Cost?
The table below provides an illustrative example of how everyday expenses can add up during retirement.
| Monthly Expense | Illustrative Cost |
|---|---|
| Household bills | €800 |
| Food & groceries | €500 |
| Travel & holidays | €400 |
| Car & transport | €300 |
| Leisure & hobbies | €300 |
| Healthcare | €200 |
| Family & gifts | €200 |
| Total Monthly Income | €2,700 |
This simple illustration demonstrates how quickly everyday living costs can accumulate.
Thinking about retirement in terms of monthly income often makes planning much easier than focusing on a single pension value.
Your Pension May Not Be Your Only Income
Your pension is often just one part of your retirement income.
Depending on your circumstances, you may also receive income from:
- State Pension entitlements
- Savings
- Investments
- Other assets
Looking at all potential income sources together can help you create a more complete retirement plan.
Why Planning Early Makes a Difference
The earlier you begin planning, the more flexibility you’ll have.
Starting early gives you time to:
- Review your pension contributions.
- Adjust your investment strategy.
- Make gradual changes as your circumstances evolve.
Small adjustments made over many years can often have a significant impact on your future retirement income.
How Oaktree Financial Services Can Help
Every retirement looks different.
That’s why every retirement plan should too.
At Oaktree Financial Services, we help clients estimate the income they’ll need in retirement and build practical financial plans that support the lifestyle they want.
Regular reviews also help ensure your plan continues to reflect your goals as life changes.
Tracy Sumstad is a highly qualified and experienced Senior Financial Consultant with over 20 years of expertise in the Finance Sector. Tracy is well-equipped to provide comprehensive advice on financial planning and corporate solutions. Her focus lies in helping clients identify their unique values and goals, empowering them to make informed financial decisions that protect and enhance their wealth and success.
