Are you preparing for life in retirement on someone else’s terms?

I bet if I asked an audience for a show of hands on how many are working towards a future planned by someone else, few would move a muscle. Yet on a one-to-one basis, my experience is totally different.

Think about the retirement age your current pension is set to. What about your contract of employment? What does that say? When does your spouse expect you to stop work? And what about the Government and your eligibility to draw a state pension?

Sometimes if you are an employer or are self-employed, you may have had a hand in setting the age or date for winding down your career. But most of the time, you’ll be confronted with a myriad of factors that have made the decision for you.

Take your pension plans. Your employment-related pension will likely have an age set between 60-65, while the state pension age currently sits between 66-67. Ignoring the state for now, let’s consider the work-related retirement issues which still seem to be largely driven by convention as opposed to individual demand or wishes.

Despite scare stories in the media about pensions crises and the fear that most will be unable to afford retirement, this has rarely been true of the clients I have served over many years. Of course, the position of the young looks much less rosy than that of baby boomers, but there is still no cause for panic.

Regardless of generation, one key mistake I see regularly is that the vast majority plan for later life purely based on finances rather than what they actually want to do. The result is, a large proportion of the over 65’s today are net savers after expenditure and tax.

Perhaps a more sensible move would be to reimagine retirement altogether. While it made sense when it was introduced in 19th Century Germany to respond to a youth unemployment crisis, it’s becoming considerably less relevant in today’s climate. In fact, what I’ve seen is that even people in their seventies often wish to continue to work in some way, shape or form. Couple this with the fact that the average retired household only needs to spend £26,000 per year, and it seems our current idea of what we need in later life is totally disconnected from reality.

In fact, I have never ceased to be amazed by how little income some people require in retirement. This is usually down to their attitude to life. This can be anything from general contentment to a lack of desire for the latest tech gadgets or a constantly expanding wardrobe. As a result, there is frequently a mismatch between pension saving and actual need.

It seems that people are simply going along with convention. They started work, joined employers’ pension schemes and saved hard with the goal of “retiring” at 65 or preferably early at 60. What’s wrong with age 58 or 67? Why not 87? If the latter age seems too old, try telling Her Majesty The Queen or maybe Sir Michael Caine.

What is most at fault in the current system is the convention of retirement in the first place. A growing number of people find that part-time employment or profitable hobbies can bring much more meaning to retirement than simply sitting around, playing golf, or going on cruises. That is not to say that the latter hobbies should be ignored, but it is naïve to assume that if you didn’t find these hobbies fulfilling before, this will suddenly change when they become your only option.

It makes considerably more sense to plan for later life based on what you want to do, or can do, rather than how much money you have. Only when the former is in place, can you have a realistic and effective plan for the latter.