It’s never too early to start thinking about your pension, and putting away funds that can be used as your income later in life. At Jones Hill we have put together a helpful timeline that will help guide you through the pensions process – starting ten years in advance, so you have plenty of time to perfect your policy and your plan.
10 Years Away
With retirement ten years away, it’s time to take a step back and review all of your current savings and investments. Be sure to take into account any pensions that you may have lost track of from years gone by. There is a Pension Tracing Service that can help you to calculate these figures, as well as a predicted figure of your state pension from the Pension Service. With ten years to go, you’ll be able to work out if you’re on course for the pension you want, and you’ll have plenty of time to make up the difference if your projected income is less than you’d hoped.
Five Years Away
Conduct another review of your finances, and assess how much risk there is involved with your investments. Around five years before retirement is the perfect opportunity to begin reducing your involvement with investments that have a higher risk status, turning to those that have a more steady flow of income. At this point, a sizeable loss would be hard to recover so close to the date of your retirement. Reduce risk five years from retirement to ensure your income becomes more steady and reliable.
One Year Away
This is where things start to get serious. Get an up-to-date overview of your state pension, and put together detailed plans for your predicted income expenditure in the run up to your retirement, and the first few years afterwards. This is the point when independent financial advice is highly recommended, to ensure that you are fully prepared for retirement, and to help make any small adjustments that might be necessary.
Six Months Away
Your pension provider will send you a letter confirming your date of retirement and the current value of your fund. For those who have saved with different providers over this year, this may result in multiple letters and a few quick sums to figure out what this means for your total income.
Three Months Away
Again, you’ll receive a letter from your pension provider, this time outlining the annuity they are prepared to pay you for your pension. In certain cases, it is sometimes worth consolidating your various pension pots (if you have more than one) in order to receive a more competitive annuity arrangement. Shop around, seek some independent advice, and find the best rate for you.
Retirement Day
By the time your retirement arrives, you should feel happy and comfortable with the decisions you made in the years leading up to drawing your pension, whether you received independent pensions advice or whether you did your own research and figured out your own best policy. You should have enough to enjoy a happy and fruitful retirement.
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