FIFTIES
RETIREMENT
PLANNING
Your fifties are the perfect time to get your pension pot and retirement plans in sync. There’s a chance your earnings are at their peak and you’ve paid off some of your biggest expenses, like your mortgage.
Important information - Money in a pension is not accessible until age 55 (57 from 2028). What you do with your pension is an important decision that you might not be able to change. You should check you're making the right decision for your circumstances and that you understand all your options and their risks. The government's free and impartial Pension Wise service can help you and we can offer you financial advice if you’d like it. The information on our website isn’t personal advice.
Your fifties are the perfect time to get your pension pot and retirement plans in sync. There’s a chance your earnings are at their peak and you’ve paid off some of your biggest expenses, like your mortgage.
Tips for a perfect retirement plan
Don't panic if your pension savings aren't where you thought they'd be. There's still plenty of steps you can take to help you retire on your own terms. The key is having a decent plan in place.
Consolidate your pension pots
It's likely you'll have more than one employer in your lifetime, which means you'll probably have more than one pension pot too. This can make it hard to know how much you've got saved so far, and whether you're on track to meet your future goals.
You could consider transferring your old pensions, and combining them under one roof. You'll have more control of your money and where you're invested in the run up to and in retirement. If you've lost track of your old pensions over the years don't worry. The government's pension tracing service can help you track them down.
If you're thinking about transferring, check you won't lose valuable guarantees or benefits or have to pay excessive exit fees.
Think about where you want to live
You might have dreams of selling up and retiring abroad, plans to move closer to family, or you might want to downsize.
If you're considering moving house, potentially with the hope of freeing up some extra cash, it might be harder than you think. Emotional ties you have on your house might be hard to break. It might be more expensive than you first thought with Stamp Duty, redecorating and removals all adding up to the financial costs.
These considerations are most important if you're relying on downsizing to boost your retirement income. It's worth having a back-up plan, just in case things don't go as you expected.
Consider when to finish work
There isn’t a standard retirement age anymore, so the line between retirement and working life isn’t clear cut. Your financial situation and health are likely to influence when you finish working. You might decide to retire earlier or carry on working well into later life. In fact, many people choose the best of both worlds and semi-retire first.
All employees have the right to request flexible working from their employer, which includes cutting down your hours. Your employer has the right to refuse but they must give you a valid reason for doing so.
The Citizens Advice Bureau provides guidance on how to request flexible working.
Pension calculator
See if you’re on track to get the pension income you want or need in retirement.
Work out how much you need to retire
To help simplify saving for retirement, the Pensions and Lifetime Savings Association (PLSA) has updated national income and living standards to help people work out how much income they might need.
They have set out three living standards:
- Minimum: £14,400 a year will cover all your needs with a bit of money left over for fun
- Moderate: £31,300 a year would leave you more financially secure
- Comfortable: £43,100 a year would mean you have more financial freedom and can afford some luxuries
These figures are based on a single person living outside of London.
Pension calculator
See if you’re on track to get the pension income you want or need in retirement.
Get to know your pension options early
For most of us the State Pension won't be enough on its own. And you might need to take money from your pension before you reach State Pension age. Typically you can access your personal pension from age 55 (rising to 57 in 2028). There are three main options to choose from:
- Annuities - An annuity will provide you with a secure income for life. You can usually take up to 25% tax-free cash and then your annuity income is taxable.
- Drawdown - This is a flexible option, but also risky, because you could run out of money. You can usually take up to 25% tax-free cash at the start.
- Lump sums - 25% of the withdrawal is usually tax-free and the rest is taxable. This option is also flexible but risky, because you could run out of money.
What you do with your pension is an important decision. We strongly recommend you understand your retirement options and check which options are right for you. Take financial advice or seek guidance if you're unsure.
Think about how long your pension needs to last
These days we're living longer and healthier lives. So, we need to make sure our pensions last longer too. It can be tempting to withdraw whatever amount you want, but without any real planning you could find yourself running short later on.
You could choose to keep your pension invested and just take the income that your investments produce. This strategy is known as taking the natural income (or the natural yield) and improves the chances of a growing pension over time which continues to provide an income.
This strategy comes with risks. The income that your investments produce could go up as well as down and therefore so will the amount available to withdraw. You can find more income and investment strategies in our guide to investing in drawdown.
Alternatively, choosing to exchange your pension for an annuity means you will receive a guaranteed regular income for as long as you live. For most people it might make sense to wait until after you've finished work completely. You'll no longer have an income stream from your earnings, and an annuity can help cover your essential bills without worry.
Want to talk things through?
It's your chance to become more confident about your retirement plans. We have a dedicated team happy to answer your questions and talk through your retirement plans so far.
You can book a review with one of our specialists five days a week: Monday-Friday 8am-5pm.
No personal advice will be given during the call. If you think you need advice after speaking to our experts, they can put you in touch with an adviser.
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Expert support and advice
Guidance from Pension Wise
Pension Wise is a free government service for people getting ready to receive a UK defined contribution pension (this could be a personal or workplace pension).
It offers impartial guidance on pension types, how to access savings, and the tax implications of each option.
Helpdesk support
Our Bristol-based helpdesk are here for you six days a week. Our friendly and knowledgeable team are ready to answer your questions no matter how big or small.
Please contact us or schedule a callback at your convenience.
Advice on your retirement plans
Our financial advisers can help you develop a retirement income strategy, ensuring your investments align with your goals.
They'll advise you on the best time and methods for accessing your pension.
Advice on your retirement plans
Our financial advisers can help you develop a retirement income strategy, ensuring your investments align with your goals.
They'll advise you on the best time and methods for accessing your pension.