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Life is complicated. Things can and do happen. Circumstances change – sometimes for the better, sometimes for the worse.

Your life goals can also change. So you might be tempted to ask yourself: ‘Why bother going to the effort of trying to plan my long-term finances in the first place? I’ve got years left before I retire’.

However, it’s usually easier to renovate a house than it is to build one from scratch. And it’s not hard to foresee the kinds of ‘renovations’ your retirement planning might need if circumstances change.

This includes:

  • The age at which you want retire.
  • The retirement income you would like to draw.
  • The money you are prepared to save and invest.

In short, there’s nothing to stop you tweaking one of these three variables to get a better retirement outcome. Our new tool can help you do that (but more on that later).

Your choice?

The earlier you retire, the longer you’ll need to be supported by your investments, which means saving more money and/or spending less in retirement. The later you retire, the less you’ll need and the less frugal you’ll need to be when you retire.

Similarly, the more retirement income you target, the likelier you’ll need to save more and/or work for longer. In contrast, the less you think you’ll need to spend, the more the opposite is true.

And of course, the more you save for your retirement in the first place, the more options you’ll have to retire earlier and/or have a higher retirement income, and vice-versa.

For example, we calculate that a 33 year-old with personal retirement savings of around £88,000, who invests an additional £3,600 in their pension each year and then retires on an annual income of £30,000 when they hit 651, would likely run out of money by age 86. And, yes, if you’re wondering, that is with the state pension included.

In contrast, were this person to increase their annual pension contributions to £6,000, their retirement savings would likely last them until 100.

Food for thought, right?

We appreciate that not everyone will be able to choose when they retire or what they can earn as retirees. But I can say with some confidence that the earlier you think about these issues, the more choice you will eventually have.  

Sweet spot

So how do you find your own personal sweet spot? What is the right mix of retirement age, income and savings for you?

This is where our goal-adjustment tool can help by enabling you to adjust these three essential variables as they relate specifically to you. You’ll find it if you apply to join Vanguard Personal Financial Planning, at the end of our comprehensive fact-finding process.

Once we’ve run through your numbers, examined your financial situation and arrived at a personalised financial plan, you can then either press ahead and go over it with one of our planners, or readjust your numbers and recalculate your plan using the tool.

Make no mistake, it is a powerful piece of financial-planning kit that will put you in control by giving you a real sense of how long your pension savings might last you.

The mathematical drivers behind each recalculation not only take account of your private savings and investment costs2 but also the state pension most of us are eventually entitled to. The modelling factors in our proprietary long-term market forecasts1 and plays them out across 10,000 different possible scenarios. In this way, we account for the returns that we think your retirement investments will continue to earn, as well as inflation.

What comes out of it is a projection of your future cash flow and whether your retirement savings are likely or not to last you until the age of 100.

That vision thing

Tweaking your inputs will give you a better grasp of the answers to many of the key questions you might latently have.

For example:

  • If I’m not on track to meet my retirement goal, what would be the impact of saving another £100 a month?
  • What would be the impact on my retirement finances if I worked for another year?
  • What if I was projected to be on track to reach my existing retirement goal but decided I might rather take a higher income?
  • What kind of income would I be able to afford, based on my existing pension pot and rate of retirement saving, if I decided to retire earlier?
  • How much more would I have to save to enjoy X income if I retired at age Y?

And because it is based on real data, and informed by all the latest tax legislation, the conclusions will be personal to you.

We have previously described signing up to Vanguard Personal Financial Planning as having a financial sat-nav with all the software updates included. Well the goal planning tool, sticking with the motoring analogy, is akin to switching on the full beams when driving at night on a long and winding mountain road.

Try them. Both will give you a greater sense of control over your long-time finances and a better feel for the adjustments you could make along the way, if need be. They may also give you a taste of the value of advice.


1 Based on the Vanguard Capital Markets Model (VCMM), a proprietary forecasting tool providing investors with a range of possible future expected returns for a wide range of asset classes. The projections and other information generated by the VCMM regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Distribution of return outcomes from VCMM are derived from 10,000 simulations for each modelled asset class.

2 This assumes costs of 0.79% per annum.

Investment risk information

The value of investments, and the income from them, may fall or rise and investors may get back less than they invested.

Important information

Vanguard Personal Financial Planning offers restricted advice. This means we will only recommend Vanguard products and investments. We will not consider the whole of the market. Vanguard will manage your investments on your behalf. You will not be able to place trades on your own account.

This article is designed for use by, and is directed only at, persons resident in the UK.

The information contained in this article is not to be regarded as an offer to buy or sell or the solicitation of any offer to buy or sell securities in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so.

The information in this article does not constitute legal, tax, or investment advice. You must not, therefore, rely on the content of this article when making any investment decisions.

Issued by Vanguard Asset Management Limited, which is authorised and regulated in the UK by the Financial Conduct Authority.

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