Making the transition into retirement is a big step and therefore having a retirement planning checklist can help you prepare, so the journey into this new phase of life is as smooth as possible for you.
More important than any financial considerations is what sort of lifestyle do you want in retirement. Remember that retirement could now be 20/30/40 plus years, so there is plenty of time to do all the things you have always dreamed of doing. But at the same time, we only have one life and now is the time to live it – no excuses!
Once you know the lifestyle you want in retirement you can work out how long your retirement savings need to last.
Items that should be on your retirement planning checklist
State Pension Forecast
People forget that the government will actually provide you with some form of pension when you reach State Pension retirement age as long as you have made appropriate National Insurance contributions during your working life.
Now you may or may not retire before the State Pension retirement age but regardless, it’s always a good idea to get an idea of what you will be paid, as this will form the foundation of your retirement income.
You can get a State Pension forecast quick and easy online.
Understanding other pensions
In order to understand what sort of income you can expect from your pensions in retirement it’s a good idea to write to all of your pension providers and ask for an updated valuation of each pension. This will tell you what you have and you can then consider whether you should consolidate pensions to keep the administration of managing these pensions simple.
Income required for each phase of life
Life in retirement is very different than it used to be. Years ago, retirement only lasted a few years before you reached your life expectancy. Now life expectancy has increased massively and many people are entering retirement fit and healthy.
This means you are likely to be more active during the early years of your retirement and less active the older you get. There is also the real possibility of care costs in the future to consider.
This type of journey may mean you need your income in retirement to be flexible, therefore work out what sort of spending you expect to be doing and when. This will give you an idea of how best to use your pensions in retirement.
How to withdraw from your pensions
Remember you don’t need to purchase an annuity and secure an income for the rest of your life. This might be right for you but if not you would be making an irreversible decision.
You could instead consider drawdown and using your pensions like a savings account, making a withdrawal as and when you need to.
From age 55 you can consider taking a pension tax free lump sum from your pensions. This could be useful to pay off outstanding debts or for major one off spending commitments like house repairs.
If you would like more information on your pension options download our FREE Pension and Retirement Options Guide.
Protecting your pensions in the event of death
If you decide to go down the drawdown route with your pensions you may wonder what happens to my pension if I die?
Well pensions have become very useful for passing on benefits to your loved ones. If you have a large estate and therefore an Inheritance Tax problem, any money held inside a pension can be passed on Inheritance Tax free.
To be confident on where your pension money is left you should complete an ‘Expression of Wish’ form, also called a ‘Death benefit nomination’ form for each pension you hold. Your pension providers will normally have their own version of this form.
Your own retirement planning checklist
So you don’t forget what you need to do when planning for retirement we have created a Retirement Planning Checklist which you can download for FREE and keep as a useful aid.
Of course if you would like to speak to a professional expert who can help you through your retirement journey with a real focus on delivering the lifestyle you desire please give us a call.