Preparing for Retirement: What you Need to Know

Now that you’re nearing retirement, your new life is about to begin. As with any new stage in life, you need to prepare to aid the transition from the old to the new. Pre-retirement, there are many areas which you can consider planning for. Preparing for retirement both practically and personally is essential. This will help you to settle into retirement comfortably.

Financial Preparation

1. Plan your Income and Expenditure

Working out how much money you will be receiving and determining if this will be enough to support you is the most important part of retirement preparation. Now that your regular source of income (your job) will have ceased, you must consider all new possible sources of income (pension, savings, etc.). Comparing this income to your average expenditure will allow you to make the right decisions sooner rather than later. Perhaps you will keep on some part time work after you retire? Perhaps you would like to free up equity by downsizing house? These are all important choices that, if made now will allow you to have a happy and relaxing retirement later on.

2. Discover your Personal Pension Entitlements

Make sure you get in touch with all your pension providers to work out your income and eventually to tell them that you are retiring. You may have a number of personal pension funds that have been arranged yourself or through previous employers. Many people forget about these and up to £5.5 billion of pension entitlements goes unclaimed in the UK each year. If you are having trouble tracing your previous pensions, you can get an assessment conducted by the free Pension Tracing Service that the Government runs. You may also be entitled to pension credit so take some time to review this.

3. Claim your State Pension

Around four months before you reach State Pension age, you should automatically receive a letter from the Department for Work and Pensions (DWP). This will provide details on what to do to start claiming. If you do not receive the letter, you should contact the State Pension phone claim line. You can claim your pension even if you decide to keep working. However, you can also deter your pension while you work which will increase the amount you receive.

4. Check your Tax Codes

You should check your tax codes if you are still working to ensure that any taxable state benefits (such as State Pension) are included. You need to let HRMC know if there are any significant changes. These would include deferring a pension or taking up part-time work. There is detailed information on taxaid.org.uk on tax for those approaching pension age.

5. Check your State Benefit Entitlement

Depending on your circumstances you may be entitled to state benefits such as Winter Fuel payment and council tax benefits. These can make a big difference to your retirement fund so make sure you are aware of what you are entitled to. For more information on benefits outside of your pension, read our previous post on financial entitlements.

Personal Preparation

1. Define your Retirement Goals

You have probably thought about what your dream retirement will be like. Relaxing and enjoying your post work life is something that many of us long for. However, making the transition from a busy lifestyle to having a lot of free time can leave you feeling dissatisfied. That’s why it’s important to plan what you would like to achieve. Retirement is the perfect time to set personal goals and challenges. Perhaps you have always wanted to learn a particular skill or language? Maybe you would like to travel and experience more of the world? The world is truly your oyster! It’s time to think big and get planning!

2. Considering your Relationship

Even though many couples have lived together for years, most will have their own jobs, colleagues and personal interests outside of the relationship. When you become retirees, you will have a lot more time together and can cherish this experience. However, it is important to continue to have both shared interests and individual pursuits. This is what healthy relationships are based on and allows for you to grow together and as individuals. Try taking part in different social clubs and activities. Having new things to talk about at the end of the day will bring you closer together.

3. Friends and Family

Spending quality time with friends and family can be difficult when you are still busy with your own career and life. Retirement is a time to realise the importance of those close to you, especially as you may now have grandchildren who need you in their lives. You may wish to consider moving closer to family members. If you are hoping to move away due to personal preference, you should plan ease of transport and how you can visit. Retirement is also a fantastic time to visit friends that you may not have seen in years. Take some time to plan how to make time for old and new friends and family.

Retirement is a time to start a brand new life which is very exciting. It is a big transition and many things will change so taking the time to plan for it both financially and emotionally will give you the opportunity to live life to the full.

 


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