Set a date for your retirement and calculate how much income you will need
It’s not as difficult as it sounds and having a rough plan is preferable to having no plan. Start with your current monthly income and expenditure. If you don’t have a monthly budget plan already, you can create one at https://www.moneyadviceservice.org.uk/en/tools/budget-planner. Now, remove any expenditure that you won’t have in retirement, such as mortgage payments or travel to and from work. You might also want to consider additional expenses if you have plans to travel etc. After completing this exercise you will have an estimate of the income you will need in today’s terms.
Next time we will look at calculating the size of lump sum you will need to accumulate to provide this income.