When you’re no longer working, the way you spend your days will be very different. Retirement will almost certainly affect the income you have, and your spending habits will change accordingly.
By sorting out your finances before you retire, you’ll be ready to begin your next chapter without worrying about how you’ll fund your new lifestyle.
So, if you want to retire in the next 12 months, here are four top tips.
1. Think about your ideal retirement lifestyle
If you fail to imagine how you’ll spend your days, you may struggle to adjust when you go from working full-time to stopping completely.
According to HR Magazine, 11% of over-50s in the UK have “unretired” and returned to work. When asked why, 62% said they did so because they wanted to stay mentally active, while 32% wanted a greater sense of purpose[1].
So, sit awhile and imagine how you’ll spend your time. Maybe you’d like to:
- Find new hobbies
- Volunteer
- Pursue further education
- Spend time with family.
The u3a organisation has myriad groups and activities for retirees – find out what’s happening close to you.
Try everything on for size and imagine all the possibilities of how you really want to spend your time once you retire.
2. Review your pension and other assets
Your plans will dictate the amount of money you’ll need to enjoy the life you expect to lead. And your income may come from multiple sources, so spend time working out what you have and where.
Consider and include:
- The State Pension – Get your State Pension forecast from the government website. It will tell you how much you should get and when you can get it. You may be able to pay voluntary National Insurance contributions to boost the amount of State Pension you receive.
- Get up-to-date statements on other pensions – Your pension provider(s) should send an annual statement detailing your retirement savings. Your latest statement will show an estimate of the retirement income the pension might generate. Finally, track down any pensions you’ve lost track of.
- Other savings and investments – Retirement income needn’t just come from a pension. You may have other savings and investments you intend to use. If this is the case for you, be sure to include everything you have and expect to draw on.
Read more: 3 simple steps to help you find valuable pension savings
This should leave you with a detailed list of all your pensions, savings and investments.
If it all feels too much, we can help gather the information and do some of the legwork for you.
3. Calculate your retirement budget
Now you’re ready to figure out how much income you might expect to have when you stop working.
As mentioned, your retirement income won’t necessarily come from your pension savings. If you have ISA investments, you may find it preferable to draw your income from here, and leave your pension invested.
If you have a small pension pot, the safety and security of guaranteed income from an annuity might be a welcome idea.
Working out how to draw a tax-efficient income is complex and can have far-reaching implications. We can help you plan your retirement income strategy to ensure it remains as tax-efficient as possible.
4. Meet your financial planner
There’s a lot to consider as you approach retirement and the decisions you make could have long-term consequences.
And yet, FTAdviser report that less than a third of people accessing their pensions for the first time in 2023/24 didn’t take financial advice[2].
Talking to a financial planner can help you understand all your options. They will help you understand the most appropriate decisions for you, based on your long-term goals and the lifestyle you want to live, while also factoring in later-life concerns like paying for care and the legacy you leave behind.
Get in touch
If you’re looking forward to retiring in 2025 or shortly after, we’re here to help ensure a smooth transition.
Email info.wp@titanwh.com or call us on 0800 048 0150.
Risk warnings
The information contained in this article is based on the opinion of Titan Wealth Planning and does not constitute financial advice or a recommendation for any investment or retirement strategy.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate tax planning.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation, and regulation, which are subject to change in the future.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
[1] https://www.hrmagazine.co.uk/content/news/one-in-10-returns-to-work-after-retirement/
[2] https://www.ftadviser.com/pensions/2024/04/16/most-people-accessing-pensions-for-first-time-did-not-seek-advice/