IT seems like just the other day I was doing my pensions exams, but that was actually 35 years ago. When I talked about pensions back then, it bored me, like eating grass. I haven’t done that, but I can imagine. Cows never look excited. Not even a smile.

Pension age just seemed like a long way away to me. Now it isn’t.

Last week, I covered the emotional impact of retiring, and what those emotional needs are that need to be met. This is a series of columns on retirement and last week’s is worth going back and reading.

So, how much income do you need? Currently 77 per cent of savers don’t actually know the answer to that. It’s reasonably easy to calculate. However, it is common for us to adjust quickly to changes in our finances, both upwards and downwards. If you have an extra £10,000 per year, it’s easily spent or frittered away. If your income is reduced, you can soon adjust in different ways.

For me, however, my sole goal is to have options available to me. A tight financial upbringing, student life and my first mortgage at age 21 at 15.5 per cent, all focussed the mind . . . funnily enough. Trying to sell that house, and not getting a viewing for 10 years also meant ‘anything is possible in this world of money, economics and geopolitical hell (I’ve never known peace)’.

This year’s inflation and unnecessary interest rate rises is baffling in one respect, and hard to live with as a home-owner/mortgagee. ‘Just leave me alone’ are common thoughts. That is the cycle of life, however, and that unnecessary inflation hurts if you are retired and don’t have the ability to throw a few hours overtime to make up the shortfall. Hence, options are everything.

How much income you need in retirement is very much dependent on how you will choose to live. Do I rent my home out and travel in a camper van for a few years? Do I do home exchanges instead of holidays? (I may be listing my idea of retirement here).

There are many studies showing what income we need at retirement. So let’s have a look at them. The minimum required after tax, for a single person is £12,800 a year, a moderate income is £23,300, and a comfortable income is £37,300 a year.

Straight away you will have responded to those numbers with ‘really?” If you don’t accept them, you won’t instigate a financial plan to achieve them. Your subconscious makes your decisions and would reject the goal immediately as a dream, and nothing would happen. A goal (your retirement income) has to be so specific if you are to trigger the correct actions to make it happen. Then, your subconscious accepts it as a plan.

Staggeringly, only 72 per cent of the population are on track for at least the minimum standard of living. Read that again. Twenty per cent will hit moderate, and eight per cent will be comfortable. That doesn’t bode well for an economy, so you can predict inflation will not be a problem then.

The easiest way to plan your income over the years is to calculate as follows: Look at your take home income. What is your expenditure that is necessary? You’ll need to track that for a few months. Are they really necessary? What expenditure will cease at retirement? Commuting costs, saving for retirement, mortgages, the need for two cars etc. Subtract those from your current ‘needed’ expenditure. What is left is your needed income at retirement. You will know you can survive on that, excluding inflationary pressures.

Then, calculate the ‘nice to haves’ that can be added to give you what you might call an income that puts you in control. How many holidays and where? How many weddings, birthdays, gifts to family, house upgrades and improvements, choice of wines, visits to the pub or restaurants?

Add that to your ‘needed’ income and you have your comfortable income needs.

Don’t pretend, convince yourself, lie to yourself about these numbers, or worse still, put your head in the sand. That strategy only encourages tumbleweed where it shouldn’t be.

:: Peter McGahan is chief executive of independent financial adviser Worldwide Financial Planning, which is authorised and regulated by the Financial Conduct Authority. If you have a question regarding your pension, call 028 6863 2692, email info@wwfp.net or visit www.wwfp.net