The Pension Series: 6 planning steps to take when close to retirement

July 2021

The Pension Series: 6 planning steps to take when close to retirement

Retirement is a major life change, but it need not be a daunting or uncertain one. The closer you are to retirement, the more options and decisions there are to make to ensure a smooth transition. From deciding how to spend your time to determining what to expect from your pension, we look at the important decisions and planning steps to take when you are close to retirement. For a fully personalised assessment, talk to one of our independent financial advisers at

1. Calculate your likely retirement income

We recommend doing this on a regular basis, although it becomes more important in the run-up to retirement. With a couple of years to go before you give up work for good, it is important to know what is in your pension pot. You can do this by:

  • Getting a State Pension statement. Do this by logging on to the GOV.UK website or by asking your independent financial adviser to help. Your State Pension amount will be determined by the National Insurance contributions you have made during your working life.
  • Checking other pension pots. You may have other pensions in addition to your State Pension. This could be a defined benefit pension (also known as a stakeholder pension), which is one that both you and an employer contribute to. You may also have a personal pension, one that you pay into on a regular basis. You should get an annual update letter from the pension provider, and you can also request an update at any time.  
  • Tracking down any forgotten pension pots. If you have changed employers during your career, you may have other stakeholder pensions. While they may not be actively managed, they still hold money that you are entitled to. Go through your old paperwork to find any such forgotten pension pots and ask for an update from the pension provider(s).
  • Checking savings and other investments. You may have savings or other investments that you plan to draw on when you retire. Compile a list of them and the amounts available and check what, if any, access restrictions may apply.

2. Workout how much you need during retirement

Got big plans for your retirement or are you going to enjoy taking it easy after years of hard work? Whatever your plans, it is worth coming up with an outline of what you would like to do. This will help you calculate how much money you are likely to need.

For example, commuting and mortgage costs may disappear, but you may wish to travel more or want to budget for unforeseen expenses, such as healthcare. Our article on how to make sure you have enough money to retire will help you with this.

3. Clear any debts that you can

A key planning step close to retirement is clearing any remaining debts. This could make a significant difference to your disposable income. This could be anything from paying off a mortgage to settling credit card balances. It may be that using some of your savings is money better spent clearing debts, but you should consult an independent financial adviser before making such decisions. They can guide you on what the best options are, particularly as you get closer to retirement.

4. Decide when you want to retire

If you have sufficient funds to retire before you reach State Pension age, you may choose to do so at any time once you reach 55 years of age. In fact, you could retire before that, but you cannot draw on any stakeholder pension until then.

Setting a retirement date will help you with planning. It may be that you have enough in your pension pot to pick a date. However, it could be that you need to build those reserves up a little more before you can stop working. If there is a deficit between what you need and what you have, talk to a financial adviser who can guide you through the available options. Taking risks with your money too close to retirement is rarely advisable, but that does not mean there are no options available to you.

The earlier you start to plan for your retirement, the better too. You will have a lot more options to make up for any predicted shortfalls. You can also take more risks when you have a good few years before you plan to retire.

5. Who to talk to now

As well as seeking general advice from your independent financial adviser, there are a number of people to speak to as you get closer to retirement. One to two years before your desired retirement date, get in touch with your employer. They will let you know more about the process of drawing down on your stakeholder pension and what steps and decisions you need to make in advance.

Once you know when you are going to start drawing down on your State Pension, talk to the Department of Work and Pensions. They will need to know when you are going to do so. Finally, your tax code will change, so you will need to inform HMRC as well.

6. Decide how you want to draw your pension

Depending on what pension pots you have, there are a few options on how to start drawing down on them. The best one for you will depend on your personal circumstances. It is worth talking to an independent financial adviser to understand what they are, and the pros and cons of each before making a decision.

We can help guide you through to retirement

Don’t be daunted by retirement. We can help you navigate through the options and decisions so that your life in retirement is as comfortable as it can be. At Plutus Wealth we can help you get the right planning steps in place when you are close to retirement and make the transition as easy as possible. Make an appointment with one of our independent financial advisers by calling 020 7871 5200 or emailing


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