What happens when I near retirement?

Once you have started a pension, it's a good idea to keep an eye on your pension savings, as well as your finances, to see if you are on track to receive the income you'd like in retirement. It might also be worth thinking about topping up your pension to help. Here's some things to think about as you get closer to the time you plan to take your pension savings.

Considerations before you plan to retire 

Although retirement can still seem a while away, begin to consider what you want your life to be like when you get there.  Here are some things to think about as you start to build your plan:

Don't forget your spending habits are likely to change in retirement.
  • The age you’d like to retire. 
  • How much you’ll likely have in your pension fund/s – and the income you’ll need when you retire.
  • Paying off any debts before you retire.
  • Any savings, investments or other assets that you could add to your retirement income.
  • How your living expenses could change in the future.
  • How you’ll pay for any travel, hobbies or further education once you’ve retired.
  • An emergency savings fund, to help with any unexpected costs like car or home repairs.
  • How you’ll support your dependants once you’ve retired.
  • Putting money aside to pay for long-term care for you, your partner, or other dependants.

Don’t forget that your spending habits are likely to change in retirement. For example your commute costs are likely to be lower, but more time at home may mean your utility bills go up. A budget calculator can help you work out your outgoings and you can also find out more about your changing income needs within the ‘related content’ below.

Five years before you plan to retire

Now is the time to make sure your goals are on track:

  • Decide the age you’re likely to retire.
  • Consider phasing your retirement, and continuing to work part-time for your current or a new employer.
  • Boost your pension by increasing your contributions and/or adding lump sum payments (take advantage of any unused pension tax allowance).
  • Trace any lost pensions through the Pension Tracing Service.
  • Ask for up-to-date statements for all your pensions. You can also get a forecast of your State Pension at www.gov.uk.
  • Look over your investments and savings to see if they still meet your attitude to risk as you get closer to retirement.
  • Think about whether you’d like to take an income from your pension or whether you want a pot of cash, including any tax free allowance, to do something different in retirement.
  • Discuss your options with a financial adviser, if you have one.  You could also talk to family and friends.
  • If you’re 50 or over you can also access free and impartial guidance from Pension Wise. This service is available on the internet, over the telephone or face-to-face.
  • Write a Will or review your existing Will – and plan what will happen to your pension and estate if you die plus any tax implications.

Six months to go

It’s time to give yourself a retirement-readiness check-up:

  • Review your pension statements to get an accurate picture of what your funds are worth.
  • Make an appointment with your financial adviser for advice on the best retirement options for you.
  • Determine the best option/s for taking your pension savings to meet your financial and lifestyle needs.
  • Tell your pension providers you’re planning to retire, so that they can send you any and all information you need in plenty of time.
  • Update your beneficiary information.
  • Set a date for a pre-retirement meeting with your employer.
  • Let the taxman know you’re retiring because your change of status will affect your tax code.
  • Budget for changes in your day-to-day spending after you retire.

Twelve to eight weeks before

It’s down to business now - you’re just outside of your selected retirement date:

  • Speak with a financial adviser to consider your options and retirement plans.
  • Ask your provider about the ways you can access your pension based on the options available.
  • Re-discuss your options with an adviser, family and friends – and those who’ve already retired.
  • You should get a letter four months before you reach State Pension Age, telling you how to claim your State Pension. If you haven’t received this by three months before, here’s how to claim this
  • Look into any entitlements from the government over and above any State Pension you may get, as these could make a real difference to your living costs.
  • Don’t forget to access Pension Wise for further impartial guidance.

Eight to two weeks before

The final countdown! It’s time to make sure you have all the information you need to help make a decision:

  • Consider any retirement quotes that your provider may have sent you. 
  • Remember, if you want to use your pension to provide an income, you should shop around the different providers to get the best income you can. If you and/or your partner have a health and/or lifestyle condition then you could get an even higher income as different providers also cover different conditions.  More information on how to shop around can be found on the Money Advice Service website.
  • You'll also need to apply to your provider/s if you're moving pensions from different sources.
  • There you have it; happy retiring!

Need help? Have questions?

If you're looking for further information or want to chat about your product options, we can help.

Contact us