In the end it’s not the years in your life that count but the life in your years. (Abraham Lincoln)


For many of us either starting out in the workplace or much further along in our careers, we have a vague notion that we should be saving for retirement. As some of us start feeling closer to the statutory retirement age it all becomes a bit more real and scary but it is still a vague notion, although a much more stressful one.

The retirement picture changes when we realise WHY we are preparing for it. It doesn’t have to be an old age concept. It can be an exciting achievable goal of being able to live our lives as we wish and more importantly doing this before we are old.

If we plan and take the necessary action, this shadowy concept of freedom can be ours much quicker than we would have expected.

Knowing your why drives your incentive to save for retirement

Rather than just seeing your pension saving as another thing to do on your adulting chore list, start to think about it as a tool. A tool to create your visionary life. Consider what your life would look like if you didn’t have to work at all. How would you want to live, what would your ideal day look like? What would you be doing? Travelling, volunteering, writing a book? The vision is total open to your design.

What age do you see yourself retiring? No, I don’t mean the age you can get your pension, I mean the age you WANT it to happen. Knowing the target retirement age means you have added a timeline to your goal.

Knowing what you plan to spend each year in retirement is key

This does not have to be a vague and complicated calculation. Simply put, it is how much do you want to live on annually. The first part of this knowledge is knowing what you currently live on and where your money is currently spent.

This requires a close look at your expenses.

A key aspect of our spending is the emotion behind it.  

Be prepared to dig a bit deeper here as it is important that our spending is on things that nourish our body and soul and has a bigger purpose then being a crutch or maybe even a totally mindless habitual outflow.

Expenses can be broadly broken down into 4 categories,

  • Those that meet a basic physical need, shelter, food, transport.
  • Those that meet a lifestyle need, exercise, broadband.
  • Those outflows that meet a spiritual need and bring a deep sense of joy to your soul, such as travel, self-development and contribution,
  • The final category of expenses are those that arise through unconscious habitual actions, or are driven by a sense of scarcity or lack in our lives. These expenditures rather than fulfilling our basic or spiritual needs offer us shame, stress and more emptiness. These are the expenses that we can eliminate and redirect to building our freedom fund.

The clarity of knowing where your money is going puts you in the position of being able to assess how many of these flows will be applicable to your “retired” lifestyle. Add to these the additional expenses you want to incur when retired, such as more travel and staying healthy and you have your annual retirement expense number.

Rule of 25 and 4% Rule

This rule defines loosely how much money you will need in retirement. Multiple your annual retirement expense number estimated above by 25 times. This is the lump sum that can support you when you retire. This lump sum will need to be invested where it can grow at a rate higher than inflation. The stock market will generally be a big contributor to this growth. From the lump sum you have invested you will be able to withdraw 4% annually to live without depleting it.

To put this in numbers, let’s assume your annual retirement expense figure will be £100,000. This means that you will need a lump sum of £2,500,000. You can withdraw 4% of this per year which will give you the planned £100,000.

Knowing the actions to take to get you there

You have a very clear picture of when you want to retire. You have a goal in that you know how much you will need to fund your retired lifestyle. The next piece in the puzzle is to close the gap between where you are now and where you want to be in the future.

This means you will need to tackle any leakages in your cashflow. You want to maximise the cashflow building towards your goal, actions you can take now include:

  • Getting out of debt

Debt is taking away from your freedom fund. The quickest way to start growing your fund is to eliminate expensive debt. Get laser focused on your most expensive debt and pay it off faster than scheduled. You are quite literally saving money. Even though it might not feel like it, you ARE building your retirement assets..

  • Building an emergency fund

Life happens. You may fall ill and be unable to work for a time. You could lose a stable income or various other catastrophes may happen. You know life is not without its challenges and you know you don’t want them to derail your freedom plans, so create a buffer between life and your freedom fund.

  • Take out Insurance

Insure against some of the more impactful catastrophes; disability, dread disease, unemployment. Don’t leave your future to chance.

  • Take advantage of tax benefits and free pension money

Maximise the contribution to your workplace pension in so far as it is matched by your employer or establish a Personal Pension Plan where you will still be able to receive the tax benefits.

Build up further investments in tax efficient structures, such as the ISA in the UK.

Retirement saving, rather than being a vague adult responsibility that society is pushing you to do, becomes a thing of magic. The key to your freedom and choice. Knowing your why will literally change your life.


Ready to get to know your pension? Grab the free Pension Cheat Sheet which busts through the pension jargon to explain the different pensions in the UK, the tax benefits, how much you can contribute, where your money is invested and how much you should have on retirement. 

Hey there!

Michelle here,

You want to become financially independent and grow your wealth?

You are in the right place.

I help women build their financial intelligence. This means we talk money, earning it, saving it, investing it and growing it.


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