Retirement is something that is in store for everyone, but millions of people in the UK haven’t put any thought into what theirs will look like. Failing to do so could mean entering retirement without enough money to properly fund it. Almost a third, 30 per cent, of people have no plan for how they will fund their retirement, according to research from asset manager Aegon. As a result of this, they are four times more likely to feel stressed about their long-term finances, compared to those who have built a picture of their future.

Kate Smith, head of pensions at Aegon, said: ‘With life expectancy having risen over the past decade, and economic challenges forcing us to think about our money more deeply, taking the time to prepare a clear plan for our retirement finances is becoming increasingly important.’ Creating a retirement plan can help you to understand what kind of retirement pot you will need to meet your needs, and how much you will be required to save in order to achieve this.

Some 57 per cent of those who don’t have a plan in place, and therefore aren’t sure of what kind of pension pot they will need, are worried about running out of money in retirement. In comparison, just a fifth, 22 per cent, of those with a plan say they are concerned about running out of money during their retirement. Smith added: ‘Not only could a plan help you to navigate the known and unknown costs of later life – but as our Second 50 research shows, it also has value in providing peace of mind and confidence, as well as reducing stress.

‘We all deserve a retirement we can enjoy, whatever your financial reality. And having a plan doesn’t mean you have to follow strict rules every day or create a big, scary document. ‘Simply understanding what you have, what you’ll likely need, what you’d like to do, and then coming back to review it every now and then can be just as effective.’ Experts have warned that that pension savers who withdraw their tax-free lump sums without a plan ahead of the Autumn Budget could suffer in the long term, such as reinvested funds being subject to capital gains tax .

If you are just starting out in your career, then the key thing to do is to start saving into a pension. The earlier you start, the more time you have to benefit from investment growth. Employees will benefit from workplace pensions, either through auto-enrolment, where employers must pay in a minimum amount, or often more generous workplace schemes. Take full advantage of your employer’s contributions, paying as much in as you need to for them to put their maximum amount in. If you are self-employed, open a self_invested personal pension ( Sipp ) and pay regularly into that.

In the middle of your career, you should already have been saving into a pension for some time, perhaps through different employers. If you haven’t, then start now. It is never too late. To begin with, you should survey your retirement pots and savings, and the value of any property, calculating the funds that you have so far amassed. This should include locating any lot pension pots, especially any you may have been automatically enrolled on.

You can also consider when you plan to retire, and how much you can expect to have built up by the time you reach retirement age. You should compare this to what you might need for the retirement you envision having. The Pension and Lifetime Saving Association (PLSA) has benchmark retirement living standards to help people understand this. Smith said: ‘The first step for any retirement plan is to understand what you’ll likely have when you stop working. ‘And, if you have a partner that you share your finances with, don’t forget to talk to them too.’ A pension calculator can give you a projection of how your pot may grow. This is Money’s uses the PLSA retirement standards to help you work out if you are on track.

As you near retirement, working out a picture of your future is important. With that in mind, the next step is to establish your retirement goals, setting out the standard of life that you are hoping to lead, and how much money you will need each year to do that. Smith said: ‘It can be hard to envision exactly what you’ll need in retirement, but try to paint a picture of your future self and estimate how much money you’ll need to achieve it. ‘This should include continuing everyday expenses like your bills and groceries, as well as new costs that come with age, such as the possibility of funding home improvements or social care.’

With your goals defined, create a written plan setting out what you need to do, and be prepared to review it regularly, especially when there are major changes to your life. Smith said: ‘You don’t have to update your plan with every purchase you make, but as your situation or priorities change over time, it can be incredibly valuable to review your plan at regular intervals and make any necessary adjustments that allow you to feel confident you’re still on the right path.’ Finally, consider taking professional financial advice when building your plan. A good adviser will be able to help you create a plan that suited to your needs and goals, and prevent you from making costly mistakes.