If you’re in your late 50s or early 60s you may be coming up for some big changes in your life. Perhaps you have more time to think about yourself if children have flown the nest. Perhaps full-time paid employment is looking less and less appealing. Perhaps your priorities have shifted – you want to focus on your health, your friends or your community.
You’re not getting any younger but you’re far from “old”. It’s time to think about what your future might look like. Preparing for retirement can be scary and exciting in equal measure, and there are so many variables it can be hard to reach any concrete conclusions. We’re here to help you find some firm ground to stand on and survey the coming years.
How to plan for retirement
There’s no ‘average retirement’. Your best friend might be buying a camper van and setting off across America, but that doesn’t mean it’s right for you. Your choices could be different: it could be travel, but it could be volunteering, studying, training until you can bench-press 75% of your body weight or just working your way through that pile of books by your bedside. When it comes to preparing for retirement, our checklist will help you work out how to retire in a way that works for you. We’ll help you think about:
- what sort of retirement you might want
- how much money you’ll have coming in
- what the best way to access that money might be.
We spoke to Angela Kirkwood from Pension Wise, a free and impartial government guidance service from MoneyHelper in our podcast, Rewirement. She shared her tips with us on what to think about when planning for retirement, and says: “When you come to retirement and taking your money out of your pension, you have a lot of options. Pension Wise is an appointment for over 50s. It will look at all the options you have. I would say it's actually more relevant when you are starting to think about taking your money out, because basically your pension provider will send you a statement saying, ‘it's time to take your benefits. Here are all your options’. That can become overwhelming.”
Retirement planning calculator
Now you’ve thought about how to retire, let’s start thinking about how you’ll access your retirement income. When you’re planning for retirement, there’s no ‘one size fits all’ approach. Having a good understanding of how much money you have to retire with can help though. A retirement planning calculator is a really useful tool that can help you start to put some plans in place, and begin to think about things like:
- when you would like to retire
- how much money you have to retire with
- how you would like to access your retirement income.
Our Retirement Income Calculator is a good place to start. Just enter your age and how much you have in your pension pot (not including any final salary pensions you might have, or your State Pension) and it will show you how much you can access tax free, how much will be left in your pension pot, and how you can access this money.
What will your retirement look like?
Understanding how much your retirement income will be is all part of planning for retirement. Our Retirement Income Calculator can help.
Annuities and drawdown are two of the most common ways of taking a regular income in retirement. If you’re not sure which one is right for you, you can read our article – Annuity vs Drawdown to learn more.
Preparing for retirement
When it comes to planning for retirement, you don’t have to do it all in one go. But making time to work through your options is one of the best ways of maximising your income. Most of us spend more time picking out a car or choosing a new bathroom than planning for the last third of our adult life.
Angela says: “You don't need to be an expert. It's just taking a little bit of time and knowing where to go for a bit of guidance and thinking, ‘I don't need to learn everything about pensions, I just need to know about me and my circumstances and where I can go and get hints, tips, small things that I can do’…”
If you’re preparing for retirement, use our free articles and resources to help:
- Our Retirement Income Calculator can help you understand the best way to access your pension income
- Our free budget planner can help you understand your money better
- Read our article ‘What age can I retire?’ for some inspiration on what age might be right for you
- Track down your lost pension pots to make sure you’ve got a good idea of how much you have in your pension
- Learn more about how much you’ll be taxed when it comes to accessing your pension, in our article ‘How much tax will I pay on my pension pot’
- If retirement is still a long way off, learn more about pension fees and charges, and make sure you’re not paying too much on your pots.