Guide to Getting Set for Retirement

When you reach the last five years before retiring, there will be many things to consider, such as your health, finances, housing situation, and plans to live comfortably in retirement.

Changes to pension legislation in recent years have created more choice and freedom over how pension assets can be used, but with this comes complexity.

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Understanding your options

With the current economic climate making it a challenging time to retire for many, understanding your options have never been more critical, and the choices you make today will significantly impact your quality of life later on.

Given this, you will need to ask many questions to assess your financial future: How much money will I need to save? What sources of income will I have in retirement? What kind of lifestyle do I want in retirement? What will my health and care needs be in retirement? What are my estate planning needs in retirement? What are my tax considerations in retirement?

And to ensure you have a comfortable and enjoyable retirement, several things must be reviewed. Read on for your retirement checklist.

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Track down your pensions

The most straightforward way to track down your pensions and any lost ones in the UK is to use the government's Pension Tracing Service. Visit: https://www.gov.uk/find- pension-contact-details

By keeping good records, you will know where your pension money is invested, and if you have moved home or changed jobs, it's essential to update your records with your current contact details to receive all of the correspondence for your pension.

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When can you access your pension/s?

The earliest you can access your UK pension is currently age 55 (age 57 from 2028 unless your plan has a lower protected pension age). However, you can start to take benefits if you wish, and it doesn't mean you automatically receive your pension at retirement age. The exact amount you receive and how frequently your payments will depend on the rules of the pension scheme you're in.

There's no set retirement age for personal and workplace pensions, and it's down to the individual scheme rules. Some schemes will require you to retire at a specific age, while others may allow more flexibility to continue working for as long as you want. Deciding when to take your pension is a personal choice and will depend on your individual needs and circumstances.

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What's your pension's value?

There are many benefits of regularly checking the value of your UK pension as you approach retirement. This ensures your pension stays on track to provide you with the income you will require in retirement. 

By tracking your pension's value, you can ensure you are making the most of your investments. This is vital because it will help you establish what adjustments need to be made to your retirement plans.

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Get a State Pension forecast

A State Pension forecast provides you with an estimated amount of money you will receive from the government when you reach retirement age. This can be found online by going to https:// www.gov.uk/check-state-pension. You will need to provide personal details, like your date of birth and National Insurance number.

Remember that the amount stated is an estimate only, and the amount you receive may be higher or lower depending on several factors.

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Find out the value of any other investments you have

Obtaining an accurate estimate of the value of any other investments is also important when planning for retirement. This will help determine how much money you need to withdraw from your retirement accounts. If you have a large investment portfolio, you can withdraw less each year, which could help make your retirement savings go further.

The value of your other investments will likely impact how much income you will require from them to meet your retirement outgoings. With a modest portfolio, you may need to withdraw more each year to cover your costs.

Establishing the value will mean you can determine if you are on track to reach your retirement goals or need to adjust your investment and savings strategy.

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How will you access your pension?

With a UK Defined Contribution pension, you can take some or all of your pension benefits as a lump sum from age 55 (age 57 in 2028 unless your plan has a protected pension age). Up to one-quarter of your pension pot can be taken as a tax-free lump sum. The remaining balance can then be used to provide an income for life or placed in a flexi-access drawdown to be accessed when required.

You may also be able to withdraw your entire fund as a lump sum, but there are some things you should consider before doing so, as this will mean you will have less money to live on during your retirement. This is because the lump sum is subject to Income Tax (excluding the 25% tax-free part), and taking a lump sum may also affect your eligibility for some state benefits.

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Make a retirement budget

Retirement can be expensive, especially with rising inflation and the cost of living. As well as the obvious costs, such as housing and healthcare, many other bills can quickly add up for retirees. By creating a retirement budget, you can understand where your money is going and identify areas to improve.

A retirement budget should include all your anticipated income and expense sources. This will provide a clear picture of your cash flow so you can start making adjustments and get ready to enjoy your retirement years.

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Need help understanding all of your options?

With legislation changing frequently, the pension landscape can be complex. Regardless of your attitude to risk and retirement needs, we can help you be well-prepared to face retirement. 

Before making any financial decisions and retirement plans, it's vital to seek professional financial advice to understand your options and make the best decision to suit your needs. 

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For more information, please speak to our team today. 

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_{A PENSION IS A LONG-TERM INVESTMENT NOT NORMALLY ACCESSIBLE UNTIL AGE 55 (57 FROM APRIL 2028 UNLESS THE PLAN HAS A PROTECTED PENSION AGE). THE VALUE OF YOUR INVESTMENTS (AND ANY INCOME FROM THEM) CAN GO DOWN AS WELL AS UP WHICH WOULD HAVE AN IMPACT ON THE LEVEL OF PENSION BENEFITS AVAILABLE. YOUR PENSION INCOME COULD ALSO BE AFFECTED BY THE INTEREST RATES AT THE TIME YOU TAKE YOUR BENEFITS.}

_{THE TAX IMPLICATIONS OF PENSION WITHDRAWALS WILL BE BASED ON YOUR INDIVIDUAL CIRCUMSTANCES, TAX LEGISLATION AND REGULATION, WHICH ARE SUBJECT TO CHANGE IN THE FUTURE. YOU SHOULD SEEK ADVICE TO UNDERSTAND YOUR OPTIONS AT RETIREMENT.}