How much will I need to fund my holidays in retirement?

Holidays offer the perfect opportunity to escape the stress of everyday life and experience something new and exciting. So it’s little wonder why so many of us take the time to carefully plan out our dream trip or break away. In fact, a recent report found the average UK adult will spend the equivalent of 13 days a year researching and booking their holidays.

This attention to planning can also help you when it comes to your retirement. With more time to relax and free from the constraints of full-time work, it’s easy to see your retirement as one long holiday – and you may already have a bucket list of travel destinations you’d like to visit in later life. But this holiday could last for years instead of days and weeks, so it’s important to prepare yourself and budget accordingly for the journey ahead.

Plan for retirement like a holiday

Whether you take one or several holidays a year, you’ll need to consider the costs that come with this. This can include everything from flights and accommodation to insurance and spending money. And the longer and further you plan to travel for, the more these costs are likely to increase.  

The same principle applies when it comes to your retirement. With more leisure time, you may be thinking about taking more holidays or starting new hobbies, which could add to your expenses. This is on top of the money you’ll need to care for yourself and your family.

If you’re unsure about your retirement plans, it’s worth picturing the kind of lifestyle you’d like to have in the future. This can give you a better idea of what your outgoings are likely to be and how much you’ll need to save to enjoy your ideal retirement.

How much money will I need?

This will depend on your own personal circumstances but, ultimately, you’ll need to consider your holiday and leisure costs alongside the money you’ll need to live on in retirement. When you decide to stop working, you’ll also be giving up your regular salary – so it’s important that you have enough money saved up to meet your spending habits.

It’s also worth taking inflation into account, which will add to your future costs. The Pensions and Lifetime Savings Association found high inflation is contributing to a 20% increase to the ‘minimum’ cost of retirement, so you may need to save up more than you think for when you retire.

To help meet your retirement goals, MoneyHelper suggests creating your own budget planner to map out your future spending. This can be split into two categories:

  • Essential spending – the money you need to cover basic living needs such as housing costs, eating and heating
  • Non-essential spending – the money you need for things you enjoy doing, such as going on holiday or eating out

The People’s Pension also offers its own retirement planner to help you check how much income you’ll likely need in retirement. This can give you a better idea of your retirement costs, and how much you may want to save for holidays and other leisure activities.

View the planner in your account.

When planning your retirement you should consider:

  • How long do you believe you may live for?
  • Are you planning to work in retirement?
  • Are you married or have other people that depend on you financially?
  • What savings do you have (workplace pension, State Pension, savings, investments)?
  • Are you likely to be paying off any debt in retirement?

What if I don’t have enough money to meet my retirement plans?

If you don’t think you’ll have enough cash to cover your costs in retirement, it may be a good idea to start adding a bit more to your savings. The more money you’re able to put away now, the bigger the amount you’ll be able to enjoy in the future.

If you have a workplace pension, you can talk to your employer to see if you can increase the amount you contribute to your pension pot. You’ll benefit from tax relief that will be added to your savings, and your employer may also top up their own contributions to this.

You can also make regular or one-off payments into your pension. Even small increases can lead to a larger pot later in life. Visit The People’s Pension webpage to find out more about increasing your pension contributions.  

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