0 Your checklist for retirement By The Bower Team / In Retirement Planning Whether you plan to retire ten years or ten months from now, one thing is for certain: it pays to be prepared as retirement nears. Before the time that you intend to stop working, you will need to think about your financial options and the retirement choices you will need to make. The decisions you make are likely to shape your income for the rest of your life, so seeking the advice of a specialist can help you to come to a more informed decision. There is plenty to consider, so why not use our handy checklist to help make planning for retirement that bit easier? Work out your expected retirement income Calculate how much income your will receive from your State Pension and any Defined Benefit pension schemes you have: State Pension: Get your state pension forecast on the gov.uk website Defined Benefit pension: Every year you will be sent a statement showing you how much pension you’ve built up so far and how much you may get when you retire. Make sure you keep the latest one safe to help you budget, or ask for a new statement if it is lost or out of date. Consider making investments lower risk If you have a personal, stakeholder or workplace ‘defined contribution’ pension (where you build up one or more pension pots over your career), then some or all of your money is likely to be invested in funds. As you approach retirement – usually in the last ten of so years – it may make sense to gradually move your money to lower-risk investments. Clear debts before retirement Consider using savings, investments or the wealth from your property to pay off your mortgage, loans and credit cards to free up a bigger disposable income in retirement. Speak to one of our friendly specialists in retirement lending by calling 0800 411 8668. Work out your living expenses in retirement Be realistic about costs including car tax, petrol, groceries, TV packages, broadband, mobile phone contracts, insurance policies, leisure club memberships and holidays. Consider which, if any, you could (and would) cancel if your retirement income is too stretched. Budget for changes in your day-to-day finances Compare your predicted retirement incomings with your expected outgoings. If there is little or no room for unexpected costs such as home repairs or an increase in your bills, then perhaps speak to a specialist about your financial options. You may choose to work part-time, or tap into the tax-free cash from your home or from your pension fund. Decide when and how to start taking your private pension Start thinking about setting a target date for when you want to start drawing an income from your pension. You do not have to stop working to take your pension, but you must be aged at least 55. You may wish to consider using some of your pension to top up your income should you wish to reduce your hours in the months or years leading up to your retirement Decide if you want to access your tax-free allowance from your pension or leave it invested – from 55 you are entitled to 25% of it as a tax-free lump sum Decide when you want to start taking your state pension You can either start receiving your state pension from when you retire, or defer taking your payments and receive a higher weekly amount when you do start. You should consider the cost of delaying, as it could take a number of years to recoup the money you would have otherwise received. Make necessary home repairs Leaving larger repairs or improvements until you are living on a retirement income could considerably eat into your available funds, so getting your house ship-shape before retirement is a good idea. Check that your National Insurance contributions are up to date Gaps in your National Insurance record can be topped up with voluntarily contributions. This will help to make sure you receive your full State Pension. Speak to an Estate Planner There are some legal documents which are very important to arrange, particularly when you are in or approaching retirement. Bower offer a specialist Estate Planning service that can helpfully arrange these documents for you over the phone: Your Will: This can ensure that when you pass away, all your money, possessions and property are divided according to your wishes. Lasting Powers of Attorney: These are documents that allow you to name those you trust most to make decisions on your behalf regarding (a) your financial affairs and (b) your health and welfare, should you become incapable of making these important decisions at any time during your life. Equity release will reduce the value of your estate. Think carefully before securing other debts against your home.