Take control of retirement planning

We’ve put together a quick checklist to help you get started

From thinking about when to retire to what to do with different pension pots, planning for retirement can be both exciting and daunting.

We aim to make clear the realities of the retirement you’re looking for, what it might cost and whether you’re on track to achieve this. You may have already considered, or even carried out, some of the things on the list, but perhaps there are still some steps you could take?

1. What will your future look like?

Think about when you want to stop working and the kind of retirement you’d like – realistically.

2. How much income will you need?

Set a target income for that lifestyle. Creating a budget based on your current expenditure will give you a good idea of your future outgoings. They might change over time, but it’s a good starting point. It’s worth remembering that you may pay less income tax in retirement if your overall income is lower, and you won’t pay National Insurance on pension income, so your income needs may be lower.

3. Where will your income come from?

List all your potential sources of future income. Look at the latest statements for any pensions you have – they’ll usually include an estimate of what the pension could be worth in the future – and trace any pensions you might have lost track of with previous employers. Get a State Pension forecast. And think about how any other assets you have could help, such as other savings and investments.

4. Could you combine pension pots?

If you have more than one pension, it might make life easier to bring all or some of them together in one place. This could also benefit you financially, but there’s no guarantee you’ll be better off. You may get back less than if you had left your pensions as they were. We’ve written about the pros and cons of putting your pensions in one place – and an adviser can help you decide if transferring is the right option for you.

5. Are you currently on track?

Keep checking in with your finances. Read your pension statements to see what your pots are worth now and what they might add up to in the future. They’ll also tell you about how your money’s invested. Think about whether you’re saving enough and if you could put more in. There’s lots of online help in this area – like our Shape my Future tool.

6. How can you take your money?

As you get nearer to retiring, research the different ways you can get money from your pension. Are you looking for a guaranteed fixed income or something more flexible? You might prefer to dip into your pension now and again. Or mix and match your options.

For each option you’ll need to consider the potential tax implications – what you’ll be taxed on and what’s tax-free. You should also find out from your pension provider if your current pension has any special features, benefits or guarantees.

A financial adviser can help explain your options and assess what’s best for you. If you don’t have an adviser, we can help put you in touch with one. Call us on 0800 302 9656 to find out more (Monday to Friday 8am-6pm).

Need a hand with your retirement plans?

Learn more about getting your retirement plans in order, from budgeting effectively to picking your investments.