If you’re in this situation, here are some things to think about to help you understand if you really do need to do that, or whether you can go ahead and plan your future with confidence.
First, understand what you’ve got
It’s worth taking a second look at what you’ve got because it might be more than you think when you take everything into account. Remember that your retirement income can come from a variety of sources - not just your pension savings or any income you’ll get from final salary-type pensions.
You might also have individual savings accounts (ISAs), other savings and investments, or rental income from property you let out. And of course the State Pension will give you a welcome top-up when you’re eligible – currently age 66.
By using our free retirement income report, in just five minutes you can see the income you could get from all your savings and income sources, including your State Pension.
Is this enough for the future you want?
Once you know what you’ve got, you should think about what you’ll need in the years to come. These days people are living longer, so you’ll need to make sure your retirement income can last as long as you need it to.
You should consider everyday living expenses, as well as any specific plans you have for your retirement, such as regular holidays or enjoying a hobby. And then of course there are potential big one-off purchases or expenditure, like a new car or home improvements.
If you’re not sure how much you might need, you can check the Retirement Living Standards. They aim to make it easier for you to understand how much you might need based on the kind of lifestyle you want to have in retirement.
You can then use our retirement income report, which compares the income you could get with the relevant retirement living standard.
Explore all your options
Even if you’ve seen the value of your pension savings fall at some point this year that doesn’t necessarily mean that you’ll have to delay your retirement altogether. You could consider other options, such as moving to part-time working rather than retiring completely. Or you could re-think how you take your money. For example, could you take less from your pension savings until their value recovers, and use other savings sources instead to provide you with an income in the interim? And could you put off any big purchases you’d planned?
Generally speaking, taking money out of investments, like pension savings, when they’ve fallen in value isn’t a good idea. This is because the amount you take becomes a larger proportion of your overall pension pot. So if you’re able to keep your pension savings invested without touching them for a while, you could end up with a bigger pot in the future. Remember though that all investments can go down as well as up in value and could be worth less than was paid in.
Get a professional’s opinion
If all this sounds daunting, and you’re not sure where to start, consider getting help from a professional. A financial adviser can assess your personal circumstances, and tell you what’s possible and when. That way you know you’re making the right decisions for you and your future.
At Standard Life, our Retirement Advice service can support you with everything you need when it comes to your retirement. From when you can afford to retire, how much you’ll have to live on, how to fund big purchases, as well as recommending the right pension product and investment options for you.
Your adviser will create a personalised and flexible plan that works for you and your goals. They’ll also review that plan with you every year to make sure that you’re still on track for the retirement you want.
Here are three easy ways to get started:
The information in this article or any response to comments should not be taken as financial advice. It’s based on our understanding in December 2020.