This stage is often riddled with questions: What savings do I need? What will be my income sources post-retirement? What lifestyle do I envisage? What will my healthcare requirements be? What are my long-term care needs? How should I approach estate planning? What tax implications should I bear in mind? These are just some of the many aspects that warrant careful contemplation as you approach retirement.

Financial review, an essential first step
Initiating your retirement planning with a comprehensive financial review is an astute move. This ensures that your future income aligns with the lifestyle you seek during your retirement years. Beyond this, several other key elements must be reviewed to secure a comfortable and enjoyable retirement.

Let’s examine some of these:

Locating your pensions
In the UK, there are multiple avenues to locate a pension. However, the simplest approach is to utilise the government’s Pension Tracing Service. This service assists in finding lost pensions – visit here for more details.

The cornerstone of pension management is maintaining accurate records and knowing where your pension funds are invested. If you’ve switched jobs or relocated, ensure your records are updated with your current contact details. This guarantees receipt of all pension-related correspondence.

Accessing your pension
Currently, you can access your UK pension as early as age 55 (this will change to 57 in 2028, barring protected lower pension age in your plan). However, this doesn’t equate to automatic pension receipt at this age – it merely implies that you can commence receiving benefits if so desired. The specific amount and frequency of your pension payments hinge on the rules of your specific scheme.

Value of your pension
Regularly checking your pension’s value as you near retirement is essential. It ensures your pension is on track to provide the income you envisage for your retirement years. By monitoring your pension’s value, you maximise your investment and stay abreast of any fluctuations in your retirement fund’s value. This is crucial as it helps identify any necessary adjustments to your retirement plans.

State Pension forecast
A State Pension forecast provides an estimate of the government support you’ll receive upon reaching retirement age. You can obtain this forecast online via the government’s website. When requesting your forecast, you’ll need to provide personal information like your date of birth and National Insurance number. Remember, the forecasted amount is merely an estimate. The actual amount you receive could be higher or lower than the forecast, depending on many factors.

Value of your other investments
When plotting your retirement strategy, evaluating your other investments’ worth accurately is crucial. The size and performance of these assets will dictate how much you’ll need to draw from your retirement accounts annually. Should you boast a robust investment portfolio, you may have the luxury of withdrawing less each year, effectively prolonging your retirement savings.

Navigating your retirement income
The value of your other investments will likely influence the income you’ll need to generate from them to meet your retirement expenses. For those with a more modest portfolio, you may need to withdraw more each year to cover your costs. Gaining insight into your investments’ value will allow you to assess if you’re on track to reaching your retirement goals. Should your portfolio be less substantial than you had anticipated, you might need to adjust your savings and investment strategy to realign with your retirement plans.

Accessing your Defined Contribution Scheme
For those holding a Defined Contribution pension, you can take some or all of your pension benefits as a lump sum from age 55 (rising to 57 in 2028 unless your plan has a protected lower pension age). This process, known as ‘crystallising’ your pension, allows you to claim up to one-quarter of your pension pot as a tax-free lump sum. The remaining balance can then provide a lifelong income or be drawn on flexibly as needed.

Considerations before crystallising your pension
However, there are important factors to consider before embarking on this path. If you opt to take all your pension benefits as a lump sum, you’ll inevitably have less money for your retirement years. This is due to the lump sum exceeding the 25% tax-free amount being subject to Income Tax. While taking your pension fund as a lump sum won’t affect your State Pension, it can influence certain means-tested state benefits.

Importance of a retirement budget
Retirement, with its rising inflation impacts, can be costly. Beyond the clear-cut costs like housing and healthcare, there’s a multitude of other expenses that can accumulate swiftly. Retirees have numerous bills to pay from leisure and travel to groceries and utilities. This makes creating a retirement budget an essential task. By understanding where your money is going, you can identify potential areas for improvement.

Crafting your retirement budget
Creating a retirement budget needn’t be a complex task. However, it should encompass all your expected income sources and anticipated expenses. Once you have a transparent view of your cash flow, you can begin adjusting to ensure you can relish your retirement years.