How to plan for retirement
When it comes to planning for retirement, there’s lots to consider, especially as you get closer to leaving the workforce. We want to try to help keep things simple. So we’ve broken down our top five steps to help you prepare – one step at a time.
1. Think about when you want to retire
The first step is to think about when you'd like to retire.
The State Pension forms part of most people's retirement plans. The current State Pension age is 66 (rising to 67 by 2028). You can check your State Pension age on the government's website. You can also learn more about the State Pension in our guide.
The age at which you can access money from most pension plans is currently 55 (rising to 57 from 6 April 2028).
Check if the retirement age you have in mind is the one on your pension plans and see if it's possible to update this if it's different.
If you’re part of a workplace pension scheme, your retirement age may have been selected for you by your employer. You can normally change this, but this can impact your investments. Check with your employer for more information.
If you’re a Standard Life customer, we’ll get in touch as you approach your retirement date to make sure it’s still right for you. The age you have on your plan can affect investment choices the nearer you get to it.
2. Get to know your retirement options
Next, consider how you’ll take your pension savings. You can normally:
- Take your money as a flexible income (drawdown)
- Take your money as one or more lump sums
- Use your money to buy a guaranteed income for life (an annuity)
You could even combine these options to suit your needs.
You can usually take 25% of your pension pot tax-free.
Check with your provider that your pension plan offers the options you want. If not, you may need to transfer to another provider. But transferring won’t be right for everyone.
To explore your potential options, read our guide on ways to take your pension money.
3. Calculate how much money you might need when you retire
It's important to work out your ideal annual income in retirement. This amount will depend on your lifestyle and goals. For example, you might want to go on holidays abroad or do some home improvements.
We’re here to help you understand how much money you could need in future. To get an idea of what your ideal retirement lifestyle might cost, try our retirement tool.
You can learn more about how much you might need by checking the Retirement Living Standardspublished by the Pensions and Lifetime Savings Association.
4. Check that your savings can support your lifestyle
Next, think about whether your savings can support your ideal lifestyle. Start by checking the value of your pension plans. Most plans let you do this online.
To get an idea of how much your pension plans could be worth in future, you can use our pension calculator. It also includes what you might expect from the State Pension.
Some people supplement their pension savings with things like income from part-time work, rental properties, or other savings. But we understand that everyone's circumstances are different. Thinking about your own financial situation and planning accordingly can help you make sure your money lasts for as long as you need it to.
If you have a Standard Life plan, you can see how it's doing online or through our app.
5. Track down lost pension pots
Could you have any 'lost' pension pots? If you've had jobs that came with a pension plan, there could be a pot (or pots) of pension money waiting for you. To help you track down your pots, you can use the government's Pension Tracing Service.
Finding your pots and combining them into a single plan with a pension transfer could give you a clearer picture of how much you currently have in pension savings. Find out if a pension transfer is right for you.
Bringing your pension pots together with Standard Life
By combining your pension pots with us, you can:
- Cut down on admin and paperwork
- Potentially pay less in charges
- Get quick and easy access to your pension savings
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Transferring other pension plans will not be right for everyone. You need to consider all the facts and decide if it’s right for you.
The decision to transfer is yours. If you're unsure about transferring you should seek financial advice. You can also access free impartial guidance from MoneyHelper .