If you’re in your 40s and 50s, it’s likely that you’ve been contributing to a pension for some time now. You might even have a number of different workplace pensions if you’ve worked for more than one employer. But do you remember the last time you checked in on your pension and your retirement plan?
Having a written down retirement plan can help you feel better equipped for this stage of your life – to make sure you have a sufficient income for when you stop working. We’ll focus on a few factors to consider when checking in your savings. If you don’t yet have a plan in place, these hints and tips could help you get started.
Revisit your retirement plan
It’s always a good idea to reassess your plan to check you’re on track to achieving the retirement income and desired lifestyle you’re aiming for. Your priorities and circumstances can change, so you might find that you need to adapt your plan a bit since you created it. Start by asking yourself these three key questions:
1. How would you like to spend your retirement – has this changed?
Considering what you’d like to do in your retirement can help you identify how much money you need to fund the retirement lifestyle you have in mind. For example, do you want to go on holiday, invest more time in your hobbies and interests or will you maybe start a business venture?
As exciting as the thought is, remember to take everyday expenses into account as part of your retirement income such as, rent or mortgage payments, household bills and food shopping. It’s also worthwhile putting some savings aside for when you do get older, in case medical needs arise or you require home care.
Top tip: When you write down what you spend now and how that could change when you retire – take inflation into consideration. As time goes on, the prices of things tend to increase so having an extra safety net in place can be useful.
2. When would you like to retire and how long will you be retired for?
Is the age you’d like to retire still the same or has this changed? As life expectancy in the UK is currently 82 years old, and that age is expected to rise, you’ll need to take into account how much money you’ll need to support you throughout retirement.1
Dividing the total figure into an annual salary, followed by a monthly income, will show you if this amount is going to be enough. Note – consider how you’ll take your retirement income as there are terms and conditions for each option which will impact your total take home pay.
3. Are there any debt repayments you’d like to be paid off before you retire?
If you can, write down some goals to help pay any debts off before you reach retirement. It could help create some peace of mind in retirement, as it’s one less expense to think about.
Check your pension contributions
Your retirement pot could consist of workplace pensions, personal pensions, ISAs, investments and the State Pension.
When you review your pension pot, check the amount, track performance and take any action if your pension pot isn’t quite where you’d like it to be. It’s usually better to act sooner rather than later. Consider the following when you’re reviewing your pension pot:
- Look at your current workplace pension contributions. Could you afford to make changes to this amount? Perhaps it’s something you review every year even if it’s just by a small amount.
- Check how much your employer contributes. If you have a workplace pension, check your employers pension contributions – they might offer certain benefits such as matching any increase in your own contributions towards your workplace pension.
- Keep track of all your pension pots. Keep a record of all your workplace pensions to avoid forgetting about them.
- Think about the right time to retire for you. You might decide that you want to keep working, even if it’s part time or flexible hours, which could give you more time to improve your savings.
Remember, the value of an investment can fall as well as rise and isn’t guaranteed. The value of your pension pot when you come to take benefits may be less than has been paid in.
The State Pension could be a source of income
The State Pension is unlikely to be enough to support your retirement as a sole source of income. If you’re eligible for the State Pension from the Government, the amount you’ll receive may be different from other people, as it’s based on your National Insurance contribution record.
The full new State Pension is £185.15 per week but not everyone will receive this amount.2 You can check your State Pension forecast on the government’s website to see how much you could receive, when you can claim, and if you could improve it. You can also find out more by reading our article 'What is the State Pension and how does it work?'.
Understand your retirement income options
When you reach age 55 (57 from April 2028), you’re able to access some or all of your pension benefits. When thinking about your options you should consider a few factors that will influence the type of income option that best suits you – such as your personal circumstances, lifestyle and health.
Some contracts might restrict the retirement options available to you and all options are subject to tax implications, so it’s important to consider consulting a financial adviser. Flexible income, guaranteed regular income, cash lump sum or a combination? Our retirement planner helps explain these, sometimes complex, terms in a simple way so you can be better informed – and prepared.
Improve your financial wellbeing
Planning for your retirement is a step towards improving your financial wellbeing. Financial wellbeing is how you feel about the control you have over your financial future – and your relationship with money. It’s about focusing on the things that make your life enjoyable and meaningful – both now and in retirement. Our financial wellbeing index provides further hints and tips to support you in the preparation for your retirement.
As well as reviewing your pension pot and financial wellbeing, check in on your savings and any other financial products you may have. Including all of these elements into your retirement plan can provide you with a clear oversight of your financial situation.
Get further help if you need it
This article isn’t intended as financial advice. If you're in any doubt, we recommend you speak to a financial adviser. You can find a financial adviser through MoneyHelper. A financial adviser is likely to charge for their service and should provide details of their charges upfront.