Making Plans for Retirement in the UK

Nowadays, retirement is something you can look forward to, however, it does require some careful planning. One of the most important things to think about is what you want from your retirement. Would you like to spend time travelling? Is there a new hobby you want to explore? Will you be running a car? Do you have any specific funeral plans?

Whatever your retirement plans, it’s likely going to cost money. If you can work out how you spend your time in retirement, it helps you determine how much money you need.

Decide When You’re Going to Retire

There is no longer a set time for when you retire. In the UK, you can carry on working as long as you’re able and want to. If you’ve paid into a contribution pension, it’s possible to access it at any age from 55 onwards. However, if you want the money to last for your whole retirement, you’ll be better off waiting as long as possible. 

The fact that access to your pension is flexible means you can ease into retirement gradually by cutting your hours for example. By cutting your working hours, you can save more of your pension for later and maybe even keep contributing to it. 

Check the current State Pension age, as this is when you’ll start receiving a small guaranteed pension from the government. If you decide to retire before this happens, you’ll need to find an income in the meantime. 

Work Out home Much Income You’ll Likely Have

Planning for retirement also means predicting your potential retirement income. Track down any workplace pensions you might have and then choose whether to combine them or keep them separate. You’ll also have to do this for any personal pensions you’ve got. 

With all your pensions identified, you’ve now got to find out how much is in each of them. Ask for advice from a financial adviser if you’re unsure what to do. 

You’ve also got to work out your State Pension income. You can obtain a forecast from the government website.

In addition, consider any other income you might have, for example, from your investments, part-time work, or other assets such as property.  

Will Your Income Meet Your Needs

Now think about what you plan to do in your retirement. Do you have any specific goals or a preferred lifestyle? Consider what the cost of these might be. Compare these costs with your predicted retirement income. 

Hopefully, your costs will be less than your income and you’ll be able to afford your preferred retirement. If your costs are more, you may have to make some sacrifices or talk to an adviser about maximising your retirement savings.  

Drawing Your Pension

Something else you have to think about is how you’ll draw your pension. The way you choose to take an income from your pension savings is just as important as the size of your savings. 

You’ll be able to access your pension in several ways. Some are more flexible than others, while others come with greater risk and less security. There’s also the option of combining different methods to ensure you have a balance that suits you. 

Retirement and the Years Beyond

As your retirement years get closer, there are people you should talk to. Start with your employer as this will give them a chance to explain how the retirement process works and whether there are any alternatives. 

The HMRC also needs to be contacted, because your tax code will change when you retire. Also, contact the Department for Work and Pensions and let them know if and when you plan to draw your pension.

You’re going to be making plans for a long and happy retirement, but there’s no time like the present to update your Will or write one if you’ve not done it yet. You never know if the unexpected will happen. 

When you’re getting ready for retirement, planning your funeral should also be on your list. While it might seem a little morbid to be thinking about your funeral, there are some very good reasons why you shouldn’t delay such thoughts. For example:

• It reduces the stress on your family
• It helps to prevent family conflict
• You’ll be ensuring your wishes are met
• You’ll save money
• You’ll be able to prepare financially
• It will encourage meaningful conversations with your family

It’s a good idea to document your wishes so that your loved ones know exactly what you want. You can store your instructions along with your will so that they’re safe and accessible to your loved ones.  

Final Thoughts

Retirement is something to look forward to with all its new experiences. However, it’s important to remember that retirement is not a single event. Instead, it’s a new chapter in your life that is made up of different stages. You should continue to look ahead and update your plans as you go.