- Find out your State Pension entitlement and contact other providers for a pension forecast
- Work out how much you’ll need, taking into account how much you’ll need to live on, your retirement plans, and don’t forget the cost of potential residential care
- Consider financial advice on investments, including ISAs, SIPPs and AVCs to help bridge the gap
- Maximise your savings by reviewing your existing pension plans.
- Retirement planning: Do you want to retire in 10 years?
Retirement planning: Do you want to retire in 10 years?
Do you have 10 years to retirement? Do you know what kind of retirement planning you should have in place? We take a look at the things you can do now – from working out how much you’ll need, to steps you may be able to take to boost your retirement income.
If you’re wondering ‘when can I retire?’ here are some things you might want to consider:
The 10 years before you hope to retire are a key time. The retirement planning countdown is ticking and decisions you make now will have an impact on your lifestyle in retirement. It’s therefore important that you should start to look at the options available and really start to think about what you hope to achieve, what you can put in place to help and how realistic your goals may be.
If you feel bewildered by the thought of planning your retirement, then you are far from alone. According to retirement specialist MGM Advantage, more than half of adults are “not at all prepared” for retirement – a figure that has risen by more than 3 million people in the last year. MGM Advantage also found that well over 2 million people aged 55 or over are “ill-prepared” for life after work.
Does that sound like you? Are you on top of your retirement planning, or like growing numbers of people, are you thinking about working into retirement, or semi-retiring to help make ends meet? Regardless of how you see your retirement, it’s time to think about the next 10 years and what you can do.
A good first step is to find out what you can expect as income in retirement. There are a number of ways to go about this. To find out your current Basic State Pension entitlement, you can fill in a BR19 form.
The Basic State Pension is currently worth £113.10 per week, although for those retiring on or after 6 April 2016, it is being replaced by the New State Pension, which will be worth at least £148.40 per week, or £7,888 a year.
If you have changed jobs over your working life and paid into your employers’ pension schemes, you may have built up pension entitlement along the way. Contact the pension trustees of your past employers to see your entitlement.
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, but it’s up to you to get in touch with the schemes once they’re found.
Except under certain circumstances, your employer can’t normally force you to retire, so your retirement date is up to you. For many people, the date they choose to retire is the date when they can take their State Pension. By November 2018, this will be 65 for both men and women, and it’s set to rise to rise to 66 by October 2028.
But a more important way to look at it might be to ask when you can afford to retire. You’ll need to work out how much you’ll need to live on in retirement. Be realistic: you may not be spending on petrol and other commuting costs, but holidays, travel and debts to pay mean you may need more than you think.
There’s also the fact that we’re living longer – you could be retired for 30-40 years, meaning your retirement income will need to sustain you for that long – and are more likely than previous generations to need some form of long-term care.
If you’re already on track to your ideal retirement, then great. But if you’re like most of us, you’ll need a little help making sure you’re saving enough.
It may be a good idea to pay any spare cash you have into your pension scheme to boost your contributions in the run up to retirement. Although it’s unlikely to affect anyone but the highest earners, there is an annual limit of £40,000 that you can pay into a pension and claim tax relief on. Over your working life, you can pay up to £1.25m into your pension schemes – if you’re lucky enough to have hit either of these limits, you can pay into a spouse or partner’s pension on their behalf.
You should seek financial advice. Ask how to maximize your savings over the next 10 years. Not just pensions savings, but other investments, including ISAs.
You may need to think about whether it makes sense to retire later or work part time beyond retirement age.
How much you save can make a big difference to your pension pot and the kind of life you’ll be living 10 years from now, but it’s not the only important factor. Where and how your money is invested can also have a big impact.
If you’ve got 10 years to retirement it makes sense to review your existing plans. Take a good look at where your money is invested, how the investments have performed and what charges you have to pay.
Ask if there are income guarantees on any of the pension schemes you might be a member of. It might also make sense to consolidate the money you have in existing plans into one pension pot, such as a Self Invested Personal Pension (SIPP) or diversify your assets. Taking financial advice will help you understand your options before you decide which route may be best for you.
10 years may seem like a long time, but time really does fly. Taking action today can really make a difference.
Have you got 10 years to retirement? Do you wish you’d done something sooner? What’s your retirement countdown plan? And what do you think about the current state of British pensions? Share your tips, questions, and general comments below.
This article has been commissioned by retiresavvy and any opinions voiced are the author's own.
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