Retirement Countdown

November 16th, 2015

Unless you plan to retire late, by the time you reach your 60s, you may need to realy step up your retirement planning.

The five years leading up to your retirement are an especially important period in shaping your future. Making preparations at that point will give you time to focus on the lifestyle changes in front of you, and to make sure you have suitable financial provisions to achieve your retirement goals. Should anything be overlooked, you can make up for it now – rather than waiting until you retire and risking it being too late.

To give you an idea of what you should be preparing on the countdown to retirement, here are the key considerations:


It’s time to look at the great unknown. If you haven’t already considered what you want out of retirement, you will have no idea whether you have made suitable preparations. So what do you want out of retired life? Do you have specific, possibly expensive, goals in mind? And will you have future obligations, such as a desire to financially support your loved ones?

With a blueprint in mind, you can then determine if you have the financial capability to fulfil it. When was the last time you reviewed your pensions, savings and investments? If you plan to rely on them in retirement, you should start considering whether they are suitably positioned to offer you what you need.

Do you have any debts that need paying off, such as a mortgage? Addressing them now could mean you have greater financial capability in the long-run.

When contemplating all of this, don’t forget to include your partner. Talk to them about their expectations in retirement, to make sure they match up to yours. If you’re both due to retire at the same time, you will soon be spending a lot more time together.

4 years…

You need to start developing the habit of regularly reviewing your pension. In the run-up to retirement, you should be assessing it every 12 months – possibly with the help of an expert.

Don’t forget, your pension is an investment and so how it is performing will be a key factor in how much money you receive from it. You may, for example, want to look at reducing the level of risk it is exposed to (if your pension provider isn’t automatically doing so on your behalf).

3 years…

You should be considering your likely expenditure in retirement well ahead of time, in order to gauge the level of income that will be needed for you to meet your future requirements.

2 years…

Reviewing your pension fund again is vital.

You should also be considering how you might want to use your pension in retirement, as this might go a long way to determining how it is positioned.

For example, if you want to keep your pension invested via a drawdown option, taking an income from it, you might not want to ‘de-risk’ your pension now.

1 year…

You’re nearly there, but over the next 12 months there is a lot to do.

Firstly, it’s time to make a firm decision about how you will receive your pension. If you have a defined contribution pension you can withdraw some or all of it (you can usually take 25% of a pension pot tax free, your pension provider takes tax off the remaining 75% before you get it). If you want a guaranteed income in retirement, it might be appropriate to take out an annuity. If you want to remain invested and take an income, drawdown could be the right route for you.

It’s a major decision and there are a number of complexities to it. For example, if you want an income through an annuity or drawdown, you need to make sure you find a suitable arrangement for your needs. At some stage during your final 12 months before retiring, your pension provider will write to you with details of their default annuity. This might not be as suitable for your situation as other available products – you must assess your wider options before committing to anything.

It is vitally important you seek advice from a Financial Adviser in the build up to retirement to make sure you understand all the available options to you.