50s

Setting a target

When you’re in your 50s, if you haven’t already, you might want to think about setting a target for your retirement income.

Your target could depend on several things such as:

• The lifestyle you want to have when you stop working – factor in going on holiday, meals out and any hobbies you might want to do more of
• Whether you’ll have paid off your mortgage or still be paying rent
• Whether you’ll still be helping to pay for children and grandchildren
• Whether you enjoy running an expensive car or are happy getting the bus

Pensions UK’s Retirement Living Standards show how much you might spend in retirement for a minimum, moderate and comfortable lifestyle. Remember that you may pay tax on some of your retirement income, so you’ll need to set a target that leaves you with enough to cover your spending after you’ve paid tax.

For more information on the Retirement Living Standards, go to www.retirementlivingstandards.org.uk.

Checking if you’re on track

Once you’ve set a target, work out your expected income:

Compare your total expected retirement income with your target to see if you’re on track to have enough. If not, you might want to think about increasing your regular contributions if you’re not paying 7% or making additional voluntary contributions.

You can change how much you save at any time by logging in to My Pension Tracker.

Taking your benefits from age 55

If you think you’ve saved enough, you can start taking your pension benefits from age 55 (this is increasing to age 57 from April 2028).

The younger you are when you start taking your benefits, the less time you’ll have to build up your pension fund from contributions and investment returns, although if you choose to take your benefits through income drawdown, you can still leave your pension fund invested.

You’ll also need to think about how long you might need your money to last for – taking your benefits earlier will mean you’ll need them to last longer.

And if you choose to buy an annuity – to pay you an income for life – the younger you are, the longer you’ll be paid and the less monthly income you’ll receive.

For more details about how you can take your benefits, see Retirement options.

Near retirement

You can start taking your pension benefits at any time from age 55 (this is increasing to age 57 from April 2028).

If you’re thinking of retiring in the next couple of years, here are some things to think about:

• When do you want to retire?
• Do you have a partner who’s also going to retire?
• Do you have any dependants you still need to provide for?
• What’s your health like?
• Do you have debts or a mortgage to pay off, or will you still be renting?
• Do you have any other pensions or sources of income?

You’ll also need to think about how you might take your benefits – see Retirement options to find out what these are.

You might want to think about taking some financial advice or guidance from Pension Wise, to decide on the right option for you.

If you think you’re ready to start exploring your options further, see Steps to retirement to find out what to do next.