Whether you’re one or ten years away from retiring, there’s a lot to think about and plan for. Use these five tips to help get your pension savings retirement ready.
1. Get your pension investments in shape
Now that retirement is on the horizon, you might want to have a think about your chosen investments and whether they’re still right for you. When you started making payments into your pension plan, you probably had years and years of saving ahead of you. Meaning you might have chosen funds with a higher risk level, which are more exposed to market ups and downs.
But as you start to think about accessing your pension savings, those higher-risk investments might not be right for you anymore. You may decide to move into lower-risk investments. This means they’re less likely to be impacted by market fluctuations and therefore less likely to affect the amount you have to withdraw from your pot.
If you’re not sure what your attitude to investment risk is, try our helpful questionnaire.
2. Find out how much you’ll need to retire
It’s hard to know exactly how much you’ll need to retire, but the Retirement Living Standards will give you a good starting point.
They’ll give you an estimate of how much you’d need each year to fund a minimum, moderate or comfortable retirement lifestyle. They base this on how much they think you’ll need for things like food shopping, holidays, transport and house maintenance.
Once you know how much you’ll need, you’ll be in a better position to find out if you’re retirement ready, or could do with a few more years of saving to make sure you’re on track for the kind of retirement you want.
You can use our retirement income tool, which is based on the Retirement Living Standards, to help you work out how much could be right for you.
3. Decide what retirement looks like for you
Have a think about what’s realistic and what will work best for you and your circumstances. Some people find that easing into retirement is a better option than giving up work all at once. Cutting back your work hours gradually and using other savings like individual savings accounts (ISAs) or other savings and investments to supplement your income until you’re fully ready to retire could be a good option. Particularly if you decide you want to leave your pension investments alone for as long as possible.
On the flip side, you might decide that taking the plunge is right for you. In that case, you’ll need to decide how you want to take your pension savings. There are usually a few different ways you can do this. The most common being buying a guaranteed income for life (annuity) or taking a flexible income (drawdown). You can find out more about the different ways to take your money in our guide.
4. Do your research
If you haven’t already, now’s the time to brush up on your pension knowledge.
For a lot of people, a pension plan can be something they don’t really think much about until the time to retire comes. It’s just something that they know is ticking away in the background. But fully understanding your plan and everything it has to offer can make a big difference to how you get the most out of it, and the kind of retirement lifestyle it can offer you.
Find out everything you need to know about pension plans and retiring. Get up to speed with important topics like how to make your money last, how to take your tax-free lump sum, how your pension money will be taxed and how to plan for retirement. We’ve covered a lot of these topics before, so reading our previous articles can be a good place to start.
5. Get everything in one place
Something you can do to help make your retirement process smoother and easier to control is to bring all of your pensions together. It’s likely you have gathered a few pension plans throughout your career, and you might have even lost track of some of them. Finding them and bringing them together can be really useful when it comes to planning your retirement.
Transferring other pension plans may not be right for everyone, you’ll need to consider all the facts and decide if it’s right for you. You could lose money by giving up any guarantees or benefits you might get from your other pension plans. There’s also no guarantee that you’ll get more as a result of transferring.
Firstly, it’ll give you a more complete view of what you’ve actually got. It’ll also make it easier when it comes to accessing your pension savings as it’ll all come from the same place. Plus, you won’t need to pay multiple fund and plan charges to multiple providers, so it could save you some money too.
You can find out more about the pros and cons of bringing your pensions together in our recent article.
Combine your pensions with Standard Life
Transferring your pension plans to a Standard Life pension plan can help you feel more in control when you’re preparing for retirement.
We’ll provide full online access to your pension savings from age 55 (rising to 57 from 2028), so it’s easy to get your money when you’re ready.
We also offer a range of flexible investment options to suit your retirement needs, however you decide to take your pension money.
The information here is based on our understanding in October2022 and shouldn’t be taken as financial advice.
The value of investments can go down as well as up and you may get back less than was paid in.