We have all done it; day dreamed about a work-free, sunny, lazy retirement, with just the right amount of busy, along with finally having the freedom to do things your way.
That doesn’t just appear out of thin air – it takes planning, smart decisions and a willingness to regularly review progress.
Retirement planning might sound super complicated, but do not fear, the process can be broken down into four manageable steps that put you in the perfect position to achieve your retirement goals.
Whether you’re just getting started or fine-tuning your strategy, understanding the four basic steps of retirement planning can help you build a plan that’s both realistic and robust. Here’s a quick overview of what those steps involve:
- Setting Retirement Goals
- Assessing Your Current Financial Situation
- Developing a Savings and Investment Plan
- Reviewing and Adjusting the Plan Regularly
Let’s break each one down and see how they work together.
Step 1: Setting Retirement Goals
Every good plan starts with a goal and retirement is absolutely no different. But numbers are only the first consideration. It’s also about envisioning the kind of life you want to lead and translating that into financial terms.
Define Those Personal and Financial Goals
Start with the fun stuff…
What does retirement look like to you? Is it possible to retire early at 60 with a converted van, kitted out with a double bed? Or continuing part-time work into your 70s while enjoying more freedom?
Once you’ve nailed down the vision, get specific:
- What age do you want to retire?
- Where do you want to live?
- Will you travel, volunteer, or support family?
- How much income will you need to achieve that lifestyle?
Lifestyle Choices and Their Impact on Savings
This is the real part. A quiet retirement in the countryside costs a whole lot less than globe-trotting around Asia. Your lifestyle choices will directly influence how much you need to save.
Take time to estimate monthly and annual expenses in today’s terms. Then factor in inflation (a modest 2.5%-3.5% per year is a good starting point). While 2.5% has been a common benchmark, CPI inflation as of May 2025 is 3.4%. It’s smart to plan using a range (e.g., 2.5–3.5%) and stress-test your retirement plan against higher inflation.
You don’t need to be exact, but a ballpark figure gives you something to shoot for.
Step 2: Assessing Current Financial Situation
Now that you’ve got a goal, it’s time to figure out what your starting stance is.
Evaluate Assets, Debts, Income and Expenses
This is your financial health check. List it all out, everything you own (savings, pensions, property, investments) and everything you owe (mortgages, credit cards, loans). Then, look at your income sources and monthly spending habits.
Include:
- Pensions (workplace, private, state)
- ISAs and savings accounts
- Property or rental income
- Regular living expenses
- Any large upcoming costs (school fees, home renovations, etc.)
Set Your Baseline
This snapshot gives you a clear view of how far you’ve already come and how much further you need to go. It’s also a great time to identify those lovely quick wins, like cutting back on unnecessary expenses.
Understanding your baseline is key to answering: What is the process of retirement planning, and how do I apply it to my life?
Step 3: Developing a Savings and Investment Plan
Now it’s time to make that money work.
Guide to Asset Allocation for Long-Term Growth
Asset allocation is just a fancy way of saying: spread your money out wisely.
Typically, this involves:
- Equities (shares) for long-term growth
- Bonds and fixed income for stability
- Cash for short-term needs or emergencies
A younger saver might lean towards 70% equities, 30% bonds. Someone closer to retirement might switch to 50/50 or more conservative. The key is to match your risk level with your time horizon.
Maximise Contributions to Retirement Accounts
Small changes can have a big impact over time. Here’s how to boost your retirement fund:
- Increase pension contributions with each pay rise
- Use employer-matched contributions to their full potential
- Take advantage of your full annual pension allowance (up to £60,000*).
- High earners should be aware of the tapered annual allowance, which reduces contributions if adjusted income exceeds £260,000. Also, you may be able to carry forward unused pension allowances from the past three years to boost contributions.
- Don’t forget ISAs – tax-free savings matter.
If you’re self-employed, consider a SIPP (Self-Invested Personal Pension). It can provide you with an opportunity to give you more control over where your pension is invested, and contributions qualify for tax relief at your marginal rate, helping your savings to potentially go further.
*The standard annual pension allowance is currently up to £60,000 for most people. Individual circumstances and income levels may affect how much you can contribute. Speak to a financial adviser for personalised guidance.
Step 4: Reviewing and Adjusting the Plan Regularly
Even the best plans need maintenance. Life changes, markets move, and new opportunities crop up like whack-a-mole. Reviewing your plan regularly helps you stay on course.
Why Regular Reviews Matter
Think of your retirement plan like a garden. Left unattended, things go wild, untamed and get funny looks. But with regular care, it blooms!
We recommend checking in at least once a year. Ask:
- Am I still on track to hit my retirement date?
- Have my income or expenses changed?
- Has my risk tolerance shifted?
- Am I making the most of my tax allowances?
Life Events That Trigger a Plan Update
Certain events should prompt a review, even if it’s outside your usual schedule:
- A change in job or income
- Marriage, divorce, or children
- A large inheritance or windfall
- Buying or selling property
- Reaching a milestone age (50, 55, or State Pension age)
Adjust your goals, timeline, or savings rate as needed. Retirement planning is not a one-and-done exercise; it’s a living organism.
How Informed Financial Planning Can Help
Retirement planning might seem like a solo project, but it certainly doesn’t have to be. Whether you’re building your strategy from scratch or looking to fine-tune an existing plan, the right guidance can make all the difference.
At Informed Financial Planning, we specialise in helping individuals make sense of their financial future, without the jargon or overwhelm. Our advisers work with you to:
- Set realistic retirement goals that reflect your lifestyle and values
- Review your current financial position and highlight opportunities for improvement
- Create tailored savings and investment plans that grow with you
- Ensure your strategy adjusts smoothly as life changes
And we’re not just about the numbers. We’re about confidence, clarity, and helping you feel secure about what’s ahead. So if you’re not sure where to start or just want a second opinion, we’re here for that too.
Final Thoughts
Planning for retirement doesn’t need to be overwhelming. With a clear framework, a bit of discipline, and the right support, you can take control of your future and build a plan that works for you.
By understanding the four basic steps of retirement planning, you’re already ahead of the game. And if you’re wondering “what is the process of retirement planning?” – now you know: start with goals, assess your finances, build a smart strategy, and check in regularly.
Want to chat about what retirement planning could look like for you? Get in touch!
The value of investments and any income from them can fall as well as rise. You may not get back the original amount invested.
