An essential part of financial security is having or knowing you are likely to have sufficient income in retirement. But what is retirement?Definitions that used to hold good are no longer relevant. Retirement used to mean stopping work at 65 (60 for women) and draw- ing a pension from the state and possibly your employer. Not that long ago, it would have been much more likely that an employee would have been in a pension scheme that would have provided them with benefits related to their final salary. Well-known demogra- phic trends mean that real economic pressure has been put on this model. Factors that are having a massive influence include: More people are now living longer. Fewer people are being born to pay the necessary taxes to support those who are living longer. Real returns on invest- ments have diminished. All of this means that: What some people thought they would have as a retirement fund is below target. Employer-funded defined-benefit schemes have all but ceased and those that continue are only run for existing members. The pension funds and savings plans built up by some are delivering less because of an overreliance on a single asset class – equities. The real value of state benefits is diminishing and will diminish even further. More people will need to put off full retirement, with increasing numbers working longer full time or contin- uing to work part time. An increasing number of people are coming to rely on realising some value from their residential property. Devising solutions that are right for particular individuals is a function that cries out for informed advice. For this reason, the retirement funding market is one that is subject to very little risk of disintermediation. As I have said before in this column, the essence of having the retirement that most of us would love to have is to plan and then implement the plan. In other words: To think about what you want. To set realistic achiev- able targets. To take disciplined action to achieve those targets. In planning to accumulate wealth, the process will be founded on: Portfolio construction to reflect attitude to risk, timescale, the amount available to invest and target income/capital. Wrapper choice to reflect the need for access to cap- ital, form of benefits and tax minimisation. The combination of portfolio construction and wrapper choice will be essential to enable the investor to reach his or her target. For many, if they do not change what they are doing, there will be a significant gap between: What they would like to have andl What they will have. The adviser has a fundamentally important role to play here in helping the client to realise that this gap exists and to help create the justifiable anxiety necessary to spur the necessary action. The solutions include: More being saved. Longer savings periods. Better returns being secured. Setting smaller targets. Paying less tax on what is saved. Drawing on other assets, say, through a lifestyle change. Let us look these options. If, after comparing the likely outcome based on current saving against the target, there will be a shortfall, then one obvious option will be to save more. This: May be possible. May be possible by giving up some current expenditure. May not be possibledepending on the indivi- dual being advised. To the extent that saving more is not possible, then the target date for the time when less income will be earned and investments will take over as the provi- der of income will need to be deferred. Often, a combination of these first two factors will be necessary but advice is essential. The perfect answer. There is no need to change current habits or feel any financial pain. Even a 1 to 2 per cent net increase in returns each year could make a significant difference over the long term. Inevitably, the greater the drive to squeeze more returns from funds, the greater will be the degree of risk that will need to be assumed. More on this next week.