Getting Ready To Retire? Here’s What You Need To Do
Getting ready to retire seems like an intimidating task, but where do you begin? Although many retirees have the right to a state pension, it may not be enough to enjoy a comfortable retirement.
Common questions you’ll ask yourself in the lead-up to retirement are:
“Will I have enough money to live the lifestyle I want?”
“How long will my money last?”
“Which pension freedom option is best for me?”
It’s a difficult task to find these answers on your own accord which is why most people seek the help of a financial adviser before calling time on their working lives. The sooner you start to review your finances the better, having a well-thought-out plan for your retirement is one of the most crucial financial decisions you’ll ever make.
Getting ready to retire, what should I do?
Planning for your retirement typically takes place five or so years beforehand and in order to help you we have created some steps you should address…
Here are 8 steps you should consider when getting ready to retire.
1 - Track down your old pensions
In order to paint the complete picture of your retirement finances, you need to track down your old pensions. As we work over the decades it’s quite common to accumulate several workplace pensions with old employers, of which we need to take into account. If you’re unsure where to start, the UK government offers a pension tracing service, alternatively please do get in touch and we can help you locate any old pots.
2 - When can you access your pensions?
As of April 2015, pension freedoms have given savers in defined contribution (DC) schemes better access to their cash, allowing them to make flexible withdrawals from the age of 55/57. Having said that, you can delay taking your pension until a later age as a way to take advantage of more years of savings and stock market returns.
3 - What’s your pension’s value?
When it comes to getting ready to retire, many of us will focus on how much money we have saved, but we might not necessarily have checked this on a regular basis. The first place to start is to check out your pension statements, which are usually given to you on an annual basis by your pension provider. In your statement, you will find all the information related to your plan, as well as the value and an estimation of how much it's expected to pay out in the future.
4 - Get a state pension forecast
While the state pension may not be sufficient to solely rely on, it provides an important part of most people's retirement plans. In order to know how much your state pension is going to be in the future, you can contact the Future Pensions Centre. They can provide you with a statement. The amount you are entitled to as a state pension is determined by the amount of national insurance contributions you have made during your working life, this will show on your statement alongside the amount you are entitled to.
Future Pension Centre contact details:
Phone – 0800 731 0175
Website – Check your State Pension forecast - GOV.UK (www.gov.uk)
5 - Getting investment advice
As far as retirement savings are concerned, pensions are not the only option that can be used. Many of us have a variety of investments that could be used in addition to our pension to provide us with a source of income after we leave the workplace.
In other words, if you have any stocks and shares, ISAs or savings accounts, you should consider how they can be incorporated into your retirement plan. Perhaps some of these can be used for the first couple of years while your pension continues to grow?
6 - How will you access your pension?
With the introduction of pension freedoms, you now have more options than ever before when it comes to taking your pension and there is no one-size-fits-all approach to taking it. There are three basic options when it comes to withdrawals: Flexible access (also referred to as drawdown), Annuities as well as Cashout. Hence, no matter what kind of investment you choose, whether you want to leave your money invested and dip into it as and when you need, convert it into an income for the rest of your life, take a large lump sum, or a combination of all 3 - you have a wide range of options to choose from. Our recommendation would be to speak with a pension specialist who can provide you with an analysis of the different scenarios and determine which is most suitable for your individual circumstances.
7 - How is your pension invested?
The decisions that need to be made as you approach retirement are significant, and one of those is how your retirement fund is invested. The fact that you do not have the luxury of time to recover from any stock market crashes means that you might want to consider moving into less volatile investment funds. You might also consider reviewing the fees that your pension provider/adviser is charging you as this could be another area where savings can be made.
8 - The benefits of advice
There's a lot to think about when it comes to pensions because they can be complicated. Making good decisions about your money and your future can be made easier with professional financial advice. Planning for retirement is incredibly important because it will aid you in staying financially stable when you get older. Knowing how much you have, how to access it, and when you can retire comfortably requires knowledge.
Getting ready to retire emotionally.
The emotional changes you will experience when you retire are an area that many overlook. It is understandable that making financial decisions that will affect our lives for decades brings a tremendous amount of stress and anxiety. There will be times when we feel daunted, overwhelmed, and concerned about making these important decisions, so it's always best to speak with an adviser who can put your mind at ease that you are making the right decision.
Creating a plan for when you are actually retired is also crucial. You may have followed the same routine for decades, waking up, eating breakfast, going to work, etc. We are often left with mixed emotions when that activity suddenly stops - "what should I do next?" is a common question. Prepare yourself with a plan of action, stay active, and look upon retirement as an opportunity to do all the things you never had time to do.
Get in touch for help.
Get in touch with us today if you’d like to review your situation. As our name suggests, we have a wealth of knowledge in the field of pensions and can help you in making these all-important decisions before you take the plunge into retirement.
