It’s possible to get away with a “finger-in-the-air” approach for much of our day-to-day lives, whether it’s how much salt you add to dinner or judging if the petrol left in your tank will be enough to get you to work and back.
However, this strategy can be particularly risky (and costly) for your financial goals.
For example, if you underestimate your pension contributions, you might risk your future quality of life. And if you fail to buy life insurance, believing it too costly, your family could miss out on vital financial support after you die.
It might be time to put fingers away and start measuring with scales. Here are four important costs that can benefit from your undivided attention and precise financial planning.
1. Underestimating the cost of retirement now could impact your future quality of life
While you may be comfortable with the knowledge that your pension exists, how confident are you that it will be enough to retire on?
According to MoneyMarketing, three-quarters of UK adults aged 50 and over are unprepared for a potential 100-year lifespan.
With an estimated 3.67 million people globally expected to live to 100 by 2050, you might need to adjust your pension contributions to make your ideal retirement lifestyle a reality.
The Retirement Living Standards, released by Pensions UK, can help you decide what you want your retirement to look like, based on minimum, moderate, and comfortable standards of living. It breaks down each lifestyle based on household bills, travel costs, holidays, and more. You can consider which lifestyle suits you best to gain a rough idea of how much you should be saving.
For a more detailed and tailored strategy, a financial planner can help you design your retirement lifestyle, as well as maximise the tax efficiency of your pension contributions so that you have more wealth to retire on.
2. Including the cost of care in your savings plan can enhance your financial security
Another mistake easily made is failing to factor in the cost of later-life care. MoneyWeek reports that three out of five over-45s underestimate care home costs by thousands of pounds each year.
Care can range from help at home and live-in carers to 24-hour care in nursing homes – the latter costs an average of £66,456 a year according to industry experts.
If you don’t factor these costs into your plan, assets that you had hoped to pass on to your beneficiaries may be used to foot the bill. In some cases, it might even be your loved ones who are left to pay from their own pockets.
To remedy this, you can start integrating the cost of care into your pension planning now. For help calculating how this will affect your savings and investments on a month-to-month basis, you can seek professional advice from your Engage financial planner.
3. Planning your estate today could help you pass more of your wealth to your loved ones
It’s natural to want your wealth (and as much of it as possible) to pass to your loved ones when you die. However, Unbiased reported in 2025 that 71% of UK adults didn’t understand how Inheritance Tax (IHT) works. What’s more, many hadn’t taken essential estate planning steps like writing a will or discussing inheritance openly with their beneficiaries.
While thinking about your own death might not be easy, planning for IHT now can help ensure that your financial legacy can pass safely into the hands of your friends and family. Yet, many people underestimate the impact that IHT could have on their loved ones’ inheritance.
If you choose to wait until the last moment to plan for IHT, or shut your eyes to it completely, it might mean your beneficiaries face a high IHT bill after you pass away – and one that could have been mitigated.
There are tax reliefs, allowances, and gifting strategies you can use to lower a potential IHT bill. A financial planner can help you assess your estate and calculate your liability, as well as develop tax-efficient strategies to maximise the wealth that passes on after you die.
4. Life insurance can mean extra financial security for you and your family
Consumers are sometimes sceptical about the value of life insurance, but it could provide financial security to your family should the worst happen.
MoneyWeek found that many Brits overestimate the cost of life insurance (by 184% on average), considering it an unnecessary and overly expensive additional cost. But, based on data from September 2025, life insurance costs just £17.07 a month on average.
In return, your loved ones receive a lump sum that could cover funeral costs, pay off existing debts and mortgages, and give you peace of mind.
If you are one of the 27% who believe a life insurance policy is too expensive, it may be worth shopping around and comparing quotes before you make a final decision. Or you can seek help from a financial planning professional.
Get in touch
If you want to start being more precise with your finances, contact Engage Wealth Management. Our financial planners can help you accurately plan out your wealth and ensure that you and your family are financially secure.
Email us at [email protected] or call 01273 076 587 today.
Please note
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate estate planning, tax planning, or will writing.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance. The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
Note that life insurance and financial protection plans typically have no cash in value at any time and cover will cease at the end of the term. If premiums stop, then cover will lapse.
