In 1943, American psychologist, Abraham Maslow, wrote a paper titled A Theory of Human Needs. He suggested that there are five levels to human experience and certain needs that underpin each level of that experience. He theorized that the needs associated with each level must be sufficiently met before an individual would attempt to move on to the next level comfortably.

Maslow’s hierarchy of needs has been used by multiple industries, from self-improvement gurus to C-suite strategists and the military. While this may seem like an obscure reference when it comes to your pension and ultimately your retirement, the hierarchy of needs is useful when trying to drill down on your requirements.

By using Maslow’s hierarchy of needs, we can get a clear picture of what sort of human experience we want to have and easily lay out a path for how to get there. It also gives us a clear assessment of where we are currently and what might be stopping us from progressing to the next stage. Maslow laid out the following five levels and, in terms of your retirement planning let’s put pen to paper:

Level One: Physiological Needs
In retirement you need to ensure your monthly income covers your basic needs (i.e., food, water, warmth, rest). A good place to start is to write down how much you estimate you’ll need to cover the following three basic categories per year:

  1. Housing costs – mortgage, home insurance, land tax, rent, utilities, maintenance, etc.
  2. Food costs – remember, the price of groceries tends to increase year upon year, thanks to inflation.
  3. Health care costs – monthly medications, insurance, doctors’ visits, etc.

Level Two: Safety Needs
Outside of the basic needs for survival, is there anything else you need to feel safe and secure? For example, in order for me to feel safe and secure it’s important that I have a financial cushion. Your list may look a little different, but personally, I’ll rest far easier knowing that I have enough to cover the following:

  • 6–12 months of the above expenses in reserve in my sinking fund (a.k.a. emergency fund).
  • Enough in a secondary savings account for unexpected emergencies (e.g., medical or travel emergencies).
  • Enough to pay for my kids’ higher education if they don’t get scholarships – don’t tell them that though!

Level Three: Belongingness and Love Needs
In retirement, how would you like to spend your social time with friends and family? How do you express your love? For example, every day my ninety-year-old poppa picks two of his friends up and they all go to breakfast. 2–3 times a week they also go out to dinner together. This is one of the things he does to feel a sense of belonging and love. Thankfully, he factored all of this in when he was planning for his retirement – eating out ten times per week gets expensive very quickly.

If having a similar sort of social outlet sounds like your kind of retirement, my advice to you is not to skimp on this section. This one’s not the easiest to plan for as it’s often the most variable portion of your planning process, so give yourself a big margin for error. I would recommend you overestimate, not underestimate here.

Level Four: Esteem Needs
In your Golden Years, it’s important to be kind to yourself and continue to do the things that make you feel good. Whether this is having your hair or nails done monthly, getting some subtle nips and tucks, having an active pool or gym membership, or perhaps hiring a home nurse to keep you company and allow you to keep living at home, having a rough idea of how much you’ll need to preserve your sense of self and dignity in retirement is an important factor – again, my advice is to overestimate here, not underestimate.

Level Five: Self-Actualization
For this final level in Maslow’s hierarchy of needs, first tally up all the numbers you wrote down in the previous four stages. This will give you the basic dollar amount you need in order to have what I would call your baseline retirement experience. Comfortable. Happy.
Once you have your baseline tally, you can now add in things like travel, splashy purchases, and hobbies. This is also where you put your bucket list. Although many people may consider their bucket list a big part of their ideal retirement, the reason it can’t come into the equation sooner is because you’ll need enough to cover off all the basic things first; if you want to Eat, Pray, Love your way through Europe once you’re retired, you should be able to do so without experiencing financial hardship when you return.

In his A Theory of Human Needs, Maslow wrote, “Man is a perpetually wanting animal,” – it’s very hard for us to be truly happy with what we have. Without prior planning for the basics, retirees often must sacrifice big chunks of their bucket list. Unfortunately, a few may also find themselves unable to meet some of their other needs too.

There is a reason why Maslow laid out the hierarchy the way he did. If you don’t sufficiently meet the needs of each level, you will never be able to experience the true feeling of self-actualizing your retirement dreams. However, with proper planning you should be able to hit that bucket list with wild abandon and you won’t have to sacrifice a single moment of the human experience. So, keep dreaming big and, if you’re not quite sure how to get there, let us worry about that part. We’re here to help you every step of the way.

To learn more, or if you have any questions, please contact Melanie Gauntlett, Financial Pensions Advisor at Freisenbruch, at or call +1 441 294 4660 Ext 279.