Another year over and what have you done? Probably some good things with your retirement plans—but let’s check, and get you back on track if something’s gone skew-whiff in the last 12 months
OK: you had your last drink on New Year’s Eve, and are determined to get to the 31st of this, your annual go at Drynuary. (Well, New Year’s Day technically, but it’s the spirit that counts.) You’ve renewed the gym membership. You’ve downloaded Duolingo for another go at learning Basque… surely you’re all set for New Year, New You?
Not quite. Though I love the childlike innocence and faith in yourself you show this time of the year—when we both know you’ll be back Splitting the G before the 20th, you’ll go once to the gym this month as it’ll be heaving with too many grim-faced sweating fatties for it to be any fun, and Basque will quietly join all the other languages you can’t do more than order a beer in—there is actually one New Year/Fresh Start activity that is 100% worth doing: time for a financial plan MOT.
The aim: let’s work out if there actually is enough money either set aside or coming, in order to retire by the date you want. And January, when ,like it or not, you probably won’t be that busy and hiding from the weather, is the perfect bit of pause in your annual cycle to see if the sums still add up.
That’s fine: one, you’re human (actually, you are probably more cheese by body weight now), life gets in the way, money may have been spent not saved, you may have won more client work than expected, and so on. Let’s plug some current data back into the model, then, as a reality check and chance for a reset if needed.
Questions you want to ask and answer:
- Am I (or us as a couple/growing family) over the financial finish line yet?
- If not (1), are we on track to get over the financial finish line by the time we retire?
- If not (2), what’s the real date: if we’re well off the pace, how can we get back on track?
A clean baseline
Joking aside about resolutions, January is an excellent timeframe for this kind of audit as it’s the one point in the year when you have clean data. Bonuses are in, you probably know what you need to pay HMRC on the 31st (always a fun morning, that), pay reviews will be in sight, and you’ll have all sorts of end-of-year summaries from your banks, etc.
Demo your superlative Excel skills
Forget theoretical budgets; the only reliable estimate of future spending is what you actually spent in 2025. So (and don’t ask ChatGPT to do this—it will get it wrong, it’s better at homework than accounting), open the spreadsheet and tot up:
- all total household outgoings for the year
- take out all the one-offs (looking at you in the corner, ’54 Strat)
- add known upcoming commitments (school fees, university costs, property, dependants, car repair, new roof over the stables)
- apply a reasonable inflation assumption (this is a good tool for exactly that).
On the next sheet, do the same for income and you current pensions, savings and investments Include:
- expected (joint, if applicable) salary for the year
- employer pension contributions and the state that’s in
- current private pension contributions and the state that’s in
- cash savings
- any lump sums or windfalls (include legacies/estates)
- property equity and mortgage changes
- stuff you know will impact all this.
Do the math and see what is left from income minus spending (your surplus income)
Look at it, fall over. Sigh.
Then get back on the horse and use your spending as a true baseline for your realistic spending in retirement.
Age is always a factor
You next need to map your figures against where you are in life. You had no money at all in your 20s, but with kids etc peak spending tends to be in your 50s and early 60s, declining gently post-70. If the sprogs have flown the coop, costs may be projected down; if little Timmy or Sneha have just taken up the viola, then you’re at the other end of all that outlay.
The emphasis here is not masochism, just realism: what cash I can afford, want and will set aside for the long-term here?
Stress test the plan
Now you should have ‘x’—the amount you think you can save every year. Add that to ‘y’, what you already have, add a conservative return estimate and produce ‘z’—what the fund will probably be in 20xx. Is it enough to cover your spending adjusted for inflation?
But any realistic long-term plan isn’t built on a single assumption. You have to push your assumptions a bit here. What if Taiwan gets invaded, etc, and the markets crash. What if you get ill and must give up work. What if you had to take a year out to look after Pops (he did it for you)? What if we do have another baby, that competitive third?
Some of this is hard or unrealistic—but with your new dataset, this is the ideal time to perform such what-ifs.
What action, if any, needs to be taken?
Once you have updated spending, saving, and investment assumptions, you can recalculate your target. Maybe you’re ahead of plan: amazing. But life being what it is, it’s probably a little more likely that the pot needs to be bulked out a bit—or you may think some more short, medium or long-term savings vehicles could be brought in, flexed, or retired.
Again, the point is to plan in enough time to a) avoid any ‘gotchas’ if at all possible, and b) spot and exploit opportunities now that could help with the big picture. Right—now the fun part. You need clear, practical to-do list items out of all this. What needs to change? What haven’t we thought of? What’s the best way to bank the nice surprises we spotted?
At this point, you may well want to drop me a line. Why: because it’s probably easier for a third party to do all this objectively for you, and if they know their stuff the calculations are likely to be a tad more scientific (or accurate). We are jere to help with the heavy-lifting here and either update and optimise the plan you’re both keeping tabs on or come up with a totally new one if necessary. We also could help you think of things you haven’t thought of up to now.
Peace of mind is worth more than its weight in gold
Bottom line: a 20-year forward financial retirement plan doesn’t need constant tinkering, but it will benefit from an annual reset. January gives you the quiet and headspace to see whether you’re still heading toward the life you want, or whether it’s time to make a few quiet adjustments that will compound for decades.
In some ways, knowing that you have (or will have) enough is arguably more important than having enough. As Alfie said all that time ago, If you don’t have peace of mind, what have you got?
Once you’ve done all this you can have a reward. Just look at all that lovely fruit and mineral water in the fridge! 🙂
Roll on February 1st!
- This article is for information purposes and does not constitute financial advice, which should be based on your individual circumstances.
- The value of investments may go down as well as up and you may get back less than you invest.