What advice would the nearly retired give the next generation?

We all want a secure financial future. But given the chance, is there anything we’d do differently? Learn what those coming up to retirement wish they’d known earlier, and their advice to help younger generations improve their chance of a financially stable future. 

Live for now, or plan for the future?

It’s the age-old question: should I spend now or save for the future? With bills to pay, holidays to enjoy or perhaps the need for a new car on the horizon, it can seem as though there’s never quite enough money left to save after we focus on living our day-to-day lives.

When it comes to retirement, it’s probably easy to think that it’s a long way into the future and there will be plenty of time for it to sort itself out. However, taking this approach might not lead to a financially secure future, as a comfortable retirement takes careful planning and putting things off now may lead to regrets later in life.

But why can it feel so difficult to plan ahead? It may be down to our own individual habits, but we’re also hardwired as humans to focus on what we need now. We evolved to prioritise the present, focusing on food to eat so that we survived, for example.

This is known as ‘present moment bias’, and while it was useful when humans were hunters and gatherers, in many ways it has outlived its uses. Present moment bias can be an obstacle to planning ahead, and advance planning is one of the key actions advocated by many who are now close to retirement.

Advice from one generation to the next

Our Retirement Revisited Report* asked some of those within 12 months of retirement for any advice they’d like to pass on to the next generation and what they’d do differently, if they could.

There were three main things they wanted to share, based on their experience:

1. Give more of your money away earlier: almost a third (31%) suggested giving more money to charities or loved ones as a way of doing the right thing and reducing any liability for inheritance tax (IHT) at the same time. This is known as ‘gifting’ and there are rules that apply to how much you can give and how often. IHT planning is something a financial adviser can help you with or you can read more about it here at GOV.uk
2. Spend less, save more: again, almost a third (29%) of the respondents wished they had spent less as consumers. Looking back at all the money they spent over the years, they wondered if there was really a need to buy so much?
3. Seek professional advice: almost 1 in 3 (29%) recommended the younger generation take professional advice to help set themselves up for a more secure future.

Wondering what can be done to act on this information early and avoid falling into the trap of living for the here and now? Here are some straightforward tips to help:

• Don’t keep putting it off for another day. Although it’s often human nature to get distracted or look for an immediate reward or to procrastinate over future plans, try to make a start on plans for your future as soon as possible, as you could be missing out on money that will help you in retirement. For example, pension contributions are entitled to tax relief – ‘free’ money from the government to encourage you to save for retirement. So the sooner you start saving for your retirement, the sooner you’ll start to receive this extra money too.
• Imagine what your future might look like – and not just decades into the far-off future. What about in one, five, ten years or more? It can help to break down your plans into more manageable chunks, to make the task ahead seem less daunting.
• Find someone to help you plan ahead and keep you on track. A financial adviser isn’t just there to do the maths, they’ll help you focus on your plans and recommend ways to save for your retirement in the most tax-efficient way. Making time to regularly review your progress and your goals with an adviser also means you can tackle any changes in your circumstances as they happen, and adjust your approach accordingly. If you don’t already have a financial adviser, visit our Get financial advice page, to help find one that’s best for you.
• Check your pension savings regularly. It’s usually quick and easy to do this online – contact your pension provider(s) for more details, if you’re not already registered for their online service. If you’ve lost track of your pension provider, you can use the government’s Pension Tracing Service. Being able to see your savings grow over time can be rewarding and may also act as an incentive to keep saving for your future.

Please note, that we are unable to give financial advice. If you are unsure about the suitability of your investment, speak to your financial adviser.

* Retirement Revisited Report by M&G, October 2022.