If retirement seems to be coming up too fast and you don’t think your plans are in place, these questions might help you get back on track.
Deciding when to retire is one of the most important choices you will ever make, but too many people have had their heads in the sand when it comes to retirement planning.
According to the 2016 Skipton Building Society Retirement Tracker, created in conjunction with YouGov and based on data from over 6,000 UK consumers, nearly half (48%) of the UK population has an ‘ostrich mentality’ with their heads in the sand when it comes to retirement saving. Many are not saving for their retirement, with little or nothing in place in addition to the State Pension.
If you’re approaching retirement age and haven’t started planning for retirement, there may still be steps you can take.
Review your situation and goals
The first thing to do is take stock of your situation and review your goals.
Examine your finances and consider when you can afford to retire, looking at what you’ll need to live on in retirement. Although you might not be spending as much on petrol through no longer travelling to work, other outgoings like holidays, travel and debts mean you may need more than you think.
Is it feasible to retire when you originally planned? Talk to your partner and work out a plan that you are both happy with. You might need to reassess the kind of lifestyle you can expect in retirement.
What pensions or other savings do you have?
If you have paid into your employers’ pension schemes over your working life, you will have built up some pension entitlement on the way. If you have changed jobs, get in touch with the pension trustees or scheme provider of your old employers to find out what you are entitled to.
If you can’t remember or can’t find the details of past employers – they may have moved or merged over the years – then the government’s Pensions Tracing Service can help you track them down.
The free service searches through the records of 200,000 schemes, but it’s up to you to get in touch with the schemes once they’re found and claim your pension.
How much State Pension can you expect?
For many people, the State Pension will be the main or only source of income in retirement. The Skipton Retirement Tracker found that while two in five people (41%) think they’d need a household income of between £10,000 and £20,000 to have an acceptable retirement, a similar proportion (39%) think they’ll miss their goals.
For those reaching the State Pension age from April 2016 onwards, the State Pension is worth £159.55 a week if you are eligible for the full amount. At just under £8,300 a year, this represents less than a third of the average UK salary of around £27,000.
Bear in mind that the State Pension Age is due to rise - by November 2018, it will be 65 for both men and women, and it’s set to rise to 67 by October 2028. Under current plans, it will then rise the 68 between 2037 and 2039. Make sure you factor this into your retirement planning.
Will you keep working?
If you can’t afford – or don’t want – to retire, then you’re not alone. According to the Skipton Retirement Tracker, one in ten (9%) UK retirees are supporting themselves in retirement by working part time.
If you’re currently employed and approaching State Pension age, your employer can’t force you to retire – except under certain circumstances – so your retirement date is largely up to you.
Working in retirement can range from cutting your hours and working part-time either with your current employer or in a new job, taking on a consultancy role, or starting your own business.
Finally, as you approach retirement, you may wish to consider reviewing your finances, including considering paying off any debts such as mortgages or credit cards, or saving as much as you can into pensions.
There are other savings products like ISAs you could consider making the most of too. You should decide which option is most suitable for your own circumstances, but you can save up to £40,000 a year in pensions or up to £20,000 in ISAs.
Increasing your savings in the run-up to retirement can make a big difference to what you can expect to live on in later life.
Get some help with your plans
No matter what state your plans for retirement might be in, it’s always a good idea to talk to someone.
Skipton Building Society offers a review service that gives you the opportunity to sit down with one of our advisers and discuss what you want to achieve in retirement. The session will look at your aspirations for later life and what plans you already have in place.
It will help you explore the options open to you and make suggestions. If we think you could benefit from professional financial advice, we can also arrange an appointment with one of our financial advisers.
To find out more about the My Review service, or request a call back, get in touch with us.
Retiresavvy is brought to you by Skipton Building Society. This article has been commissioned by retiresavvy and any opinions voiced are the author's own.