As retirement approaches, it's an opportune time to evaluate and potentially optimise your pension arrangements to allow you to make informed decisions for a comfortable future. Discover valuable resources to help you plan for your retirement.
As retirement approaches, it's an opportune time to evaluate and potentially optimise your pension arrangements. Here are some valuable resources which we believe you should review to allow you to make well-informed decisions towards your finances during your retirement years.
Pension Wise is a free and impartial service offered by the government to help you understand your pension options.
Pension Wise provides expert guidance to the over 50s with a defined contribution pension on various pension-related matters, including different types of pensions, accessing pension savings, and income options. With a defined contribution pension, the income you might receive depends on factors including the amount you pay in, the fund’s investment performance and the choices you make at retirement. This is unlike defined benefit schemes which guarantees specific retirement income.
Pension Wise can support you when you’re ready to explore your pension options. This may include deciding between an annuity (an insurance product in which you swap your pension savings for a guaranteed regular income) and a flexible drawdown arrangement (provides a retirement income and is a way of accessing your pension pot whenever you like whilst keeping the rest of your money invested), considering tax implications, and evaluating potential investment opportunities. Pension Wise can help explain these options and their associated risks, allowing you to make informed decisions.
It is advisable for those approaching retirement age to book an appointment with Pension Wise for this free, impartial guidance. You can speak to a specialist over the phone or in person. All you need to do is book an appointment for a time that suits you. Alternatively, you'll find lots of information on the Pension Wise website.
The Retirement Living Standards, developed by the Pensions and Lifetime Savings Association, offer a framework to help you estimate your desired retirement income.
Based on independent research carried out by Loughborough University, the Retirement Living Standards categorise retirement lifestyles into three levels: minimum, moderate, and comfortable, thereby estimating the amount of money needed to afford that particular lifestyle. By referring to these standards, you can gain a clearer understanding of your pension requirements and plan accordingly.
Consider your retirement goals and aspirations. Think about the lifestyle you wish to lead, whether you plan to travel, engage in hobbies, or downsize your home. Understanding your desired retirement lifestyle will help you assess whether your current pension provisions are sufficient or if additional steps need to be taken.
| Lifestyle level | Description |
|---|---|
Minimum
Single £12,800 a year
Couple £19,900 a year | A 'minimum' lifestyle covers all your needs, with some left over for fund and social occasions. You could eat out about once a month and do some affordable leisure activities about twice a week. |
Moderate
Single £23,300 a year
Couple £34,000 a year | A 'moderate' lifestyle provides more financial security and more flexibility. You could have one foreign holiday a year and eat out a few times a month. You'd have the opportunity to do more of the things you want to do. |
Comfortable
Single £37,300 a year
Couple £53,400 a year | A lifestyle that allows you to be more spontaneous with your money. You could have a subscription to a streaming service, regular beauty treatments and two foreign holidays a year. |
The government's Pension Tracing Service via Money Helper can help to find any lost pensions you may have contributed to in the past, if applicable.
Before making any decisions about your pension, it's essential to assess your current pension arrangements. Start by gathering information about all your pension schemes, including workplace pensions, personal pensions, and any additional private pension savings. The government's pension tracing service can help locate lost or forgotten pension pots, ensuring no funds are left behind.
You can phone the Pension Tracing Service on 0800 731 0193 or submit a tracing request form to the Pension Service.
If you’re a member of your employer's workplace pension scheme, don't forget to check to see whether you are taking full advantage of any matching contributions your employer will make to your own pension contributions, affordability allowing.
For complex pension matters or if you require more detailed assistance, it's advisable to consult a professional financial adviser. They can provide tailored advice based on your unique circumstances and help you navigate the intricacies of pension rules and regulations.
As retirement progresses, we believe it's essential to review your pension regularly. Factors such as changing legislation, investment performance, and personal circumstances can all influence the effectiveness of your pension arrangements. By staying informed and periodically reviewing your pension plans, you can make adjustments as needed to ensure your finances are still able to fund your lifestyle in retirement.
Taking proactive steps towards planning for retirement could allow you to be more comfortable with your financial situation and enjoy post-work life. Remember, seeking professional advice could provide invaluable support throughout this process, allowing you to embark on your retirement journey with confidence.
Any views expressed are our in-house views as at the time of publishing.
This content may not be used, copied, quoted, circulated or otherwise disclosed (in whole or part) without our prior written consent.
The retirement benefits you receive from your pension plan depend on a number of factors including the value of your plan when you decide to take your benefits which isn't guaranteed and can do down as well as up. The benefits of your plan could fall below the amount(s) paid in.
