Planning your retirement

Planning your retirement

Make sure you're on track

Getting ready for retirement doesn't start in the days and weeks before you stop work. With a bit of planning, regular reviews - and taking action when you need to - you'll be able to keep your retirement plans on track.


Review regularly and keep your plans on track

Whether you are 10 years or a few months from retirement the first step is to take stock of all your pension plans. If you have lost track of some of your pensions use the free Pension Tracing Service. As well as checking your personal and company pensions, get a detailed state pension forecast.

It may seem like a while until you retire, but small changes now could make a big difference later. So take stock of all your retirement savings to make sure you're saving tax-efficiently and you're on track for the retirement income you want.


Work out whether your retirement plans are on track

Now is a good time to assess whether your retirement plans are on track. Armed with your pension forecasts, think about how much money you will need to put your retirement plans into action.

Although the figures can vary, a handy tool to help you work out what you might need is available here.


Consider consolidating your pensions

Chances are your retirement savings will be spread across a number of personal and company pension schemes. Rather than leave them like this, you might want to consolidate. Consolidating your pensions has a number of advantages. With everything in one place it's easy to see what you've saved and how much you'll receive in retirement. It can also mean lower charges, especially if you have some older pension plans.

It's worth taking professional advice before you consolidate, though. Some pensions have more generous benefits or incur charges; these are better left untouched.

Combining your pensions

Self Invested Personal Pension (SIPP)


Contribute as much as you can into your pension

There’s still plenty of time to top up your pension pot, so make every year count.

Read more about boosting your pension


Save and invest as much as you can tax-efficiently

As well as building up your pension pot, you can use other savings and investments to help fund your retirement. A good place to start is with ISAs, which give you income and capital gains tax breaks. You can pay up to £15,000 into an ISA in 2014-15.

You could also consider investing in offshore bonds. They offer a wide range of investment options and give you more control over when you pay tax. Investments grow tax free and you can make withdrawals of up to 5% of your initial investment without paying tax. Instead, you pay tax when you cash in or withdraw more than 5% from the bond. For that reason, many people holding offshore bonds wait until they're a lower-rate or non-taxpayer to minimise their tax bill.

You may wish to seek professional advice before selecting any tax-efficient products.


With five years or less until you retire, there are still things you can do to maximise your retirement income. Your other priority will be to protect your pension pot.


Review your retirement plans thoroughly

As well as reviewing your pension plans, include your savings and investments in your review. These can be used to supplement your pension income.


Find out how much you'll need to live on

Use our tool 'Your life once you stop work' to give you an idea of how much it will cost to support the lifestyle you would like in retirement.

If there's a shortfall between your forecast retirement income and your projected outgoings, you may be able to make this up by increasing payments into your pension or other savings and investments. If the shortfall is significant, you might need to revise your plans. This could include delaying your retirement - as this can increase your pension income - or going into phased retirement and supplementing your income by working part-time.


Boost your pension payments as much as possible

You still have time to maximise your retirement income. And remember, any payments you make into your pension will attract tax relief.

Ways to boost your pension


Decide how you're going to take money out of your pension

You need to decide whether you want a guaranteed (Annuity) or a flexible income (Income Drawdown) in retirement.

An annuity gives you a guaranteed income for life, while income drawdown leaves your remaining pension pot invested.

If you go for income drawdown, you will need to check with your pension provider to make sure you can access this via your existing pension. If not, you may want to think about transferring into a pension such as a Self Invested Personal Pension (SIPP) which comes with income drawdown as standard.


Passing on your wealth

If your plans are on track and you're confident you have enough income for your retirement, you might want to start thinking about passing on your wealth.

If you don't already have a will, the first step is to get your will written. This will ensure your wealth is distributed according to your wishes, rather than those of the state.

Next, assess the value of your estate; this is everything you own, including your share of any jointly owned assets. It's also sensible to check what arrangements are in place for your pension if you die. Annuity payments will, for example, stop unless you take an annuity with an option for a partner or adult dependant to receive a pension if you die before them.

If your estate is worth more than the inheritance tax threshold (£325,000 in 2014-15), there could be inheritance tax liability when you die. Planning now can help to reduce this bill and maximise the amount of wealth that is passed on.


With retirement just around the corner there are some important decisions to be made. Here are some key points to consider, but bear in mind that the devil is in the detail. You may want to take further guidance, as these decisions could affect your lifestyle for the rest of your life.


Decide what you want to do with your pension pot

If you haven’t already, now is the time to make the decisions about how you take money out of your pension. If you have a Self Invested Personal Pension (SIPP), you can either take an annuity, which gives you a guaranteed income for life, or opt for income drawdown, where your pension remains invested and you have greater flexibility over your income.

If you are interested in income drawdown you will need to check with your provider that you have sufficient funds to do so.

Use our tool to help you decide which option is right for you.

Annuity vs income drawdown


Sorting out your paperwork

Whatever you decide to do with your pension pots, you'll need to complete some paperwork in order to receive income.

Most company pension providers will contact you a few months before your stated retirement date to finalise all the details. Personal pension providers usually get in touch four to six months in advance, but check with the administrator of your scheme so you don't miss any deadlines.

The Pension Service will also contact you with details of how to claim your state pension. This usually happens around four months before you reach state retirement age.

You can defer taking your state pension and you will receive additional pension funds or a lump sum for doing this. More information can be found at

You will also need to complete a pension coding form to make sure you don't pay too much tax in retirement. HM Revenue & Customs will automatically send this to you one month before you reach state retirement age but, if you're self-employed, you will need to request a form or download it from


Make a plan for life after work

In addition to sorting out your retirement finances, don't forget to think about how your life will change when you retire. You'll have much more free time to enjoy in retirement, so think about how you'd like to spend it.

Making the transition from full-time work is a major milestone, especially if you're giving up work completely. Having a plan in place for the first few months of retirement will make this transition easier and will help set the tone for your new lifestyle.

Whatever you do, start your retirement by celebrating your new-found freedom. You've worked hard for it; now's your time to enjoy it.