In your fifties
Your fifties are a good time to work out exactly how much you have saved and to track down any pensions you might have forgotten about over the years, perhaps because you’ve joined several different company schemes.
If you’ve got lots of different pensions and find it hard to keep an eye on all of them, you might want to think about consolidating your retirement savings. This can make it much simpler to manage your money, and to monitor where your pension savings are invested. You can find out more about consolidating your pensions in our blog Should I consolidate my pensions?
Always check whether there are any penalties for transferring and if you’ll have to give up any valuable benefits too and get professional advice if you’re not sure if consolidating is right for you.
As you approach retirement, it’s important to think about how you feel now about risk. If you’ve built up a significant pension pot over the years, you may decide you want to move some or all of your pension savings into lower risk investments such as bonds and cash, so that your savings aren’t hit by stock market volatility just before you start to draw your pension. However, if you plan to keep your pension invested and draw a regular income from it, a process known as income drawdown, then you may wish to continue to invest in to more medium to high risk assets as your pension will continue to be invested over the longer term.
Many company schemes automatically move your funds into lower risk investments as you near retirement, through a process known an ‘lifestyling’. If you are unsure about whether or not your plan does this, check with your employer or pension provider. If you are unsure as to whether lifestyling is right for you, you should seek professional advice.
If you belong to a final salary or defined benefit pension, you won’t need to make any investment decisions, as these will be made by the company you work for.
In your sixties
Ideally, you’ll be on the home straight to retirement once you’re in your sixties, and at this stage you should know when you’ll retire and at what age you can start drawing benefits from your pensions.
It’s also vital to sit down and work out exactly how much you’re going to need once you stop work.
A good thing to consider doing at this stage is to write down a list of all your outgoings and what you’ll have coming in so that you can be certain you’ll be able to afford retirement. Remember to factor in how much you’ll get from the state pension too. Our Pension Calculator can let you know roughly what you’re likely to need for either a modest or comfortable retirement.
If your income from your pensions isn’t going to be enough to cover all your outgoings, now’s the time to think about ways you might be able to supplement what’s coming in, perhaps by continuing to work part-time, or by letting out a spare room.
You should also start thinking about how you’ll access your pension savings once you retire. If you’re aged 55 or over, you can find out more about your options at retirement from the Government’s Pension Wise service. If you want advice tailored to your individual circumstances, you’ll need to seek professional financial advice.
Find out more about your options at retirement in our blog ‘Accessing your pension.’
The value of investments, and the income derived from them, can go down as well as up and you can get back less than you originally invested. This article does not constitute personal advice. If you are in doubt as to the suitability of an investment, please contact one of our advisers. Past performance is not a guide to future performance. Prevailing tax rates and reliefs are dependent on your individual circumstances and are subject to change.