Is a retirement pot a retirement plan?

Sun Pension Pot

I bet you’ve got a pot

Jo Cumbo’s public resolution – as part of national financial planning week – to adopt a plan for her retirement – was as brave as it was sensible.

How many of us have worked out a strategy for the “what if’s” that lie ahead of us. For many of us, even working out what the potential eventualities that could befall us is a task too far, one for tomorrow – if ever.

We may say to ourselves “who knows what tomorrow brings” and hum to ourselves the theme of a nostalgic movie.

But we know in the back of the heads that the day will come when we will die and that between now and then we will need to have money coming into our bank account sufficient for us to meet the activities of daily living.

We know that as we get older – our need for healthcare will increase and that our capacity to be self-sufficient will decrease.

We know that we are likely to die with an inheritance and that there will be others for whom our money and assets will be important

In short we know there are three risks that we will have to mitigate

Living too long – dying too soon and losing self – sufficiency.

Are we good to go on all three?

If I were pensions minister, I would be thinking of developing a policy around these three risks and targeting an increase in the numbers of people – like Jo – who adopt a retirement plan that addresses them.

Of course there will be a lot of individual requirements around houses, businesses, extended families and goodness knows what, that will be specific to each of us, but the big three, longevity, mortality and morbidity – are risks that we all face.

A national plan?

While it is ambitious for Government to organise and launch a national retirement initiative, it is quite possible. Jo could be its champion – assuming she has success in creating her own plan.

The question we may be asking is “can we create such a plan without financial advice?”.

My understanding is that Jo was consulting an advisor and that her plan would include his or her advice. But for many people, the services of an advisor may not be available.

Could we expect to complete a retirement plan for ourselves after our conversation with Pensions Wise?

Or is there more that we need to do before we satisfy ourselves that we are confident that in any of the three eventualities, death, living too long or losing self – sufficiency, we and our dependents could manage?

Clearly a 30-45 minute meeting or telephone conversation will not in itself be enough to create a plan.

What a good plan needs to cover

Making preparations for death and for incapacity may involve insurances, wills and conversations with those who are dependent on us. Similarly, a plan around incapacity – a much harder plan – needs to consider what the implications might be not just for yourself but for those dependent on your property, income or on their income might be. Caring is a very difficult subject to talk about.

As we grow older, we get experience of what these things are like for others , and appreciate the strain they put on us. We can use that experience to ensure we are as little a burden on those we love as possible.

In this sense, creating a retirement income is relatively easy, after all you are planning for success and the enjoyment of what hopefully is a lifetime of saving. Organising your savings may be tricky, but not impossible.

Remembering where your pension savings are is one thing, finding them another. We have found finding pensions for others difficult and I’m pleased that the early indications are that this is where the pensions dashboard will start to deliver.

Once retirement savings pots and pensions are found, then the process of organising them to ensure that they meet the long-term needs of you and your family can begin.

In my experience, unlocking the potential of these pots is exciting. The process of evaluating what is good and what not so good, exploring the options from annuities, drawdown and cashing-out can become an interesting and fulfilling process. But for it to be so, we need some kind of imaginative engagement with our cashflow needs in the future.

This engagement with issues such as inheritances, the realisation of cash from unwanted assets and the management of assets which are currently unproductive can be really exciting. The management of wealth outside the pensions wrapper may well be as much of a task as the management of the pension itself,

And of course there is our own “human resource”, our capacity to generate additional income from our activities to supplement incomes from pensions and drawdown from cash reserves.

I look forward to chatting to Jo as to how she got on

Like Jo, I too sat down and worked out how I was going to organise my later year finances. My decisions included starting AgeWage, withdrawing from my consultancy work and taking my pension from Zurich. I brought together my pensions using my  L&G workplace pension as my sole pot. I have money in ISAs and a small amount of working capital in the bank.

My plan includes a series of actions for me and others if I find myself in a life-threatening position and I have a plan in case I lose my capacity to look after myself. I am of course part of others plans and I encourage those close to me to share their thinking about how they would cope.

As I think about where I can take AgeWage, I am increasingly focussing on helping people deliver themselves the kind of plan that I am talking about. And I feel that a good metric for the success of what we will do over the coming years will be to ask people to confirm before and after they engage with us, how their confidence in their retirement plan has grown.

It is not enough to have a retirement pot – that is not a pension and it certainly isn’t a plan. To kid yourself that you are sorted for retirement because you have saved for it is delusional.

You need a plan and if you don’t know what one looks like, then you should speak with Pensions Wise, a financial advisor or you can contact me and we can have a chat.


Have you got one?

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
This entry was posted in advice gap, age wage, pensions and tagged , , , . Bookmark the permalink.

6 Responses to Is a retirement pot a retirement plan?

  1. Robert says:

    Henry, you mention in this blog…..”I too sat down and worked out how I was going to organise my later year finances. My decisions included starting AgeWage, withdrawing from my consultancy work and taking my pension from Zurich.”

    Some of your previous blogs have said that it is best to delay taking a Defined Benefit Pension until you are older, which I think you refer to as ‘patient capital’? I recall you saying in the past that you’re Zurich Pension is a DB Scheme…..if this is the case I am wondering why you have started taking it at your age?

    • henry tapper says:

      I wasn’t patient- but my early retirement factors weren’t onerous and pension increases generous!

      • Robert says:

        I see!

        You also mention…..”You need a plan and if you don’t know what one looks like, then you should speak with Pensions Wise, a financial advisor or you can contact me and we can have a chat.”

        Although I have a plan it could be beneficial for a second opinion, would you mind if I contacted you at

  2. Richard Chilton says:

    I retired once and had done a fair bit of planning beforehand. I did more detailed scenario analysis before I decided how to take my pension. But it wasn’t long before some things went “out of range” on my assumptions. And then the “unknown unknowns” kicked in.

    It can indeed be worthwhile to do a fair bit of retirement planning to avoid some nasty adjustments in later life, at least unless you are already suffering ill-health and living on benefits before “retirement”. But is is doubtful whether it is worth doing much more than “back of a fag packet” planning. It may be at least as important to keep revising your plans as life changes.

  3. John Mather says:

    It is the regular review together with a detailed cash flow model tools quantifies adjustments That are required

    A pensions sharing order in later life can be devastating especially since the capacity to accelerate funding to make repairs has been curtailed by life time allowance and taper restrictions

    The fiscal drag effect will bring more individuals into this trap

    Low productivity in the UK will cause pressure in the payment of the State Pension in coming years and if people like IDS get their way look forward to working well into your 70s

    A low interest economy and bubble level market prices will continue to widen the wealth and generation divide

  4. Pingback: Is a retirement pot a retirement plan? — AgeWage; Making your money work as hard as you do – marketing business

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