Janette and Andrew Rodger are enjoying a comfortable retirement. Their days are filled with trips to health clubs and rounds on the golf course, while holidays are spent on luxury cruises. It's a well-deserved lifestyle after years of working hard to put money away for their future.
The couple, both 68, supplemented their company pensions with a wide variety of investments. Their portfolio has exposure to everything from North American companies to European growth stocks and special situations.
"We are having a ball," says Janette. "We prepared as much as we could and had a good financial adviser. The investments that he put us in have all done fairly well so we're comfortable."
Their philosophy was to ensure their basic costs of living were covered by their pensions – they have five company pensions between them – with any excess money tucked away in a variety of investments that could be called upon to help maintain their standard of living in the future.
This careful planning has allowed the couple, who have two sons, to refurbish their four-bedroom house in Glasgow, go on regular cruises and pursue their hobbies. Janette is a regular visitor to health clubs and plays the piano while Andrew has a passion for golf.
"It's important that people get into schemes early because they will form the basis of their retirement and everything else is icing on the cake," she adds.
"As you get that bit older and you have more money to spread around, so it's also important to invest wisely."
The Rodgers are proof that it's possible to enjoy a decent retirement as long as you plan early and invest a decent proportion of your annual salary. However, millions of people are facing the prospect of a very different type of retirement – one that is run very much on a budget.
So what should the state of retirement today be teaching us? We consulted a string of independent financial advisers, pension experts and industry observers to draw up a list of lessons for our retirement well-being.
Lesson one: Start early – and ensure you're saving enough
The earlier you start, the longer your investments have to work.
Realistically, you need to be looking at a 40-year time frame to build up a decent retirement pot so that means starting in your 20s, says Tom McPhail, head of pensions research at Hargreaves Lansdown, who points out that those starting later in life will have to save substantially more to catch up.
"There's no substitute for saving an adequate amount," he says.
"If you don't put enough in, you won't get enough out – but that's a difficult message for people to take on board because it means having to make some hard choices about spending patterns and living standards today."
Very broadly, a general rule of thumb is that you should be putting away half your age – as a percentage of your salary – into a pension scheme. For example, those in their 30s should be tucking away at least 15 per cent, rising to 20 per cent after they hit the big 4-0.
Lesson two: Know what you have in place – and consolidate
You may have accumulated a number of different pension pots over the years from various employers, so go through the filing cabinets and pull all the details together. It may be worth your while, for example, consolidating them.
Bringing pensions under one roof will make it easier for you to manage – and give you a clearer idea of the value of your overall retirement pot – but you'll need to check the details of what arrangements are in place and watch out for any penalties that may apply.
Lesson three: Regularly review your investments
Pay attention to the financial foundations you have in place and revisit those decisions at least every year.
Don't put money into pension funds and forget about it – before coming back to it 10 years later and wondering why your investments haven't performed as well as you'd expected.
Neil Mumford of Milestone Wealth Management suggests people sit down with a trusted financial adviser to discuss their plans.
"People say pensions are bad but that's not the case – it's the investments held by them that may have performed poorly," he says. "It's particularly important for people to review their holdings when they are 10 years away from retirement so as to ensure they are aware of what they will receive and address any expected shortfalls."
Lesson four: Understand your attitude to risk
You also need to make sure your pensions and investments meet your needs – and your attitude towards risk.
The fact is that you will need to take an element of risk in order to generate an above-inflation return, says Carl Melvin, managing director of Affluent Financial Planning.
"It depends what reward you are seeking," he says. "If you want a high return you can't get that by sticking your money under the bed. Therefore, make sure that the returns you are seeking are consistent with the risks you take."
Generally, if you are in your 20s and 30s, you can afford to take more risk where potential gains can be higher.
Lesson five: Embrace diversification
If there's one thing that the last few years have told us, it's that diversification is one of the keys to investment success.
Regardless of how attractive a particular area may seem, resist the temptation to put everything into it as you could lose the lot should the unexpected happen. Have a spread of asset class and geographical exposure, so you are protected if one area should go down.
People shouldn't just consider pensions at the exclusion of other retirement solutions, points out Neil Mumford of Milestone Wealth Management. While they have clear tax benefits, they are not the only investment products that can be used to generate an income.
"We look to build up all types of investments for clients in order to provide a tax-efficient income for them in retirement," he says. "It's also important that they have access to capital as well which isn't possible if they have invested it into a pension fund."
Lesson six: Join your employer's pension scheme
If your employer is offering you a pension contribution, then make sure you take advantage of it because it's free money and will help bolster your retirement pot, advises Tom McPhail at Hargreaves Lansdown.
"You need to be saving upwards of 10 per cent of your earnings – and between 15 and 20 per cent if you want a good standard of living," he says. "If your employer can share the strain by contributing five per cent or more of your salary, you'd be crazy not to take it up."
Lesson seven: Continue investing in the bad times
The natural inclination is to stop investing when the economic backdrop is less than favourable, but you should fight against that and continue putting money away, according to Carl Melvin at Affluent Financial Planning.
"If the share price goes down, this represents a discount and enables you to buy more shares – and units in investment funds – cheaper," he explains. "When the price recovers, those cheaply bought units will deliver strong gains."
Living on less: Shrinking incomes take their toll
Recent statistics suggest that the income for those in retirement is falling.
People retiring in 2012 expect to live on an average of £15,500-a-year – more than £1,000 (six per cent) less than those who stopped working last year, according to research from Prudential.
The company's annual study also reveals that expected annual retirement incomes have dropped by more than 16 per cent over the last five years.
Retirees back in 2008 had the prospect of a total annual income of £18,600 – over £3,000 more than those planning to follow suit this year.
It also means that more than a third (38 per cent) of people due to retire this year are cancelling their plans with a significant proportion (22 per cent) of these are doing so because they simply can't afford to stop working, points out the study.
Vince Smith-Hughes, Prudential's retirement income expert, blames the dramatic fall in retirement income on a combination of the credit crunch, banking crisis, recession and concerns over the eurozone, but he insists that people can still do plenty to help improve their prospects in later years.
"It has never been a more important time to save into a pension as the longer savings are invested, the greater the opportunity they will have to grow," he says. "However, even those who are retiring this year could make their funds generate better incomes by consulting a financial adviser."