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Preparing for retirement
This information applies to England, Wales, Scotland and Northern Ireland
About preparing for retirement
This information is for people who are nearing retirement.
When you're nearing your retirement date, it's a good idea to start organising your money, to make sure you'll have enough to live on when you retire.
If you're going to retire soon, there are some things that you might find it helpful to think about.
On this page you'll find information about:
- when you can start getting your pension
- things to do in the months before you retire
- how to find any pension funds you've lost track of
- where to get more help and information about pensions and retirement.
When can you start getting your pension
Depending on your pension scheme rules, the earliest you can get a workplace or personal pension is when you reach 55. If you're retiring because of ill-health, you may be able to get your pension sooner.
You can't claim your State Pension until you reach state pension age. State pension age used to always be 60 for a woman and 65 for a man. However, state pension age is changing for most people.
If you're a woman born on or after 6 April 1950, you will no longer be able to claim a State Pension at 60 and if you're a man born on or after 6th April 1959 you will no longer be able to claim a state pension at the age of 65.
If you fall into one of these groups of men or women, the age when you can claim your state pension will gradually increase, depending on your date of birth.
You may have the option to put off claiming (defer) your State Pension if you want to carry on working after state pension age.
For more information about claiming State Pension, see Benefits for people over sixty.
Options for using your personal pension fund
If you have a personal money purchase pension, when you retire you'll need to use the money in the fund to give you an income for the rest of your life. You can either:
- buy an annuity or
- draw out money direct from the pension fund. This is called income withdrawal
It's very important to get help from a professional adviser when making this choice because you can't usually change your mind once you've bought an annuity.
For more information about annuities, see Choosing an annuity.
For more information about drawing money straight out of your pension fund, see Pensions income withdrawal.
For more information about getting advice about your pension, see Getting financial advice.
Checklist of things to do when you near retirement
When you're getting near to retirement, it's a good idea to start planning. Here's our checklist of things to do so that you'll be ready:
- find out what money you’ll have coming in and how your spending will change. Work out your budget to make sure you'll have enough money to live on and check whether you'll be entitled to any other benefits. You can get a State Pension forecast and forecasts for any personal pensions you have on the Directgov website. Visit: www.direct.gov.uk. In Northern Ireland you can get a State pension forecast and information on any personal forecasts on the NIDirect website. Visit: www.nidirect.gov.uk
- get in touch with all your pension providers. You may have a number of separate pension funds arranged yourself or through an employer. Make sure you've got contact details for all of them so that you can let them know you're retiring. You can get help to track down any you've lost touch with
- work out how much is left to pay on your mortgage. You may want to pay off what's left with any lump sum you'll get. Get independent financial advice before doing this
- claim your State Pension. You should automatically receive a letter from the Department for Work and Pensions (DWP) (the Pension Service in Northern Ireland) around four months before you reach state pension age. If you don't get a letter automatically, contact the DWP (in Northern Ireland, the Pension Service)
- notify your tax office. When you're nearing state pension age, complete the Pension Coding form (P161) to make sure you don't pay too much tax. The form should be sent to you automatically from HM Revenue and Customs (HMRC), unless you're self-employed. In this case, you'll need to request it from your Tax Office or you can download the form from the HMRC website. Go to: www.hmrc.gov.uk
- check whether you're entitled to other state benefits. Depending on your circumstances, you may also be entitled to benefits such as Carer's Allowance, Housing Benefit and Council Tax Benefit (help with your rates in Northern Ireland)
- get advice from an independent professional adviser. If you've got a personal pension, you'll need to buy an annuity when you retire or make another arrangement to get your pension. You should get advice about what types of annuity are available and how best to use your personal pension fund.
For more information about where to find an independent financial adviser, see Getting financial advice.
For more information about state benefits you can claim when you retire, see Benefits for people over sixty.
Tracking down an old pension
If you think you may have an old pension but can't remember the details, the Pensions Tracing Service can help you find it. You can call them on 0845 6002 537 or fill in an online enquiry form. Go to: www.secureonline.dwp.gov.uk.
If you have several small pensions, you might want to look at whether you'll be better off combining them.
For more information about combining your pensions, see Choosing an annuity.
Paying tax after you retire
When you reach the age of 65, your income tax personal allowance increases. However, you'll still have to pay tax on any income that takes you over your allowance.
You won't have to pay National Insurance contributions after you reach state pension age, even if you carry on working.
For more information about tax allowances and what income you pay tax on, see Income tax allowances and amounts.
Further help and information
On Adviceguide
For more information about pensions, see Pensions.
You may also find the following Adviceguide information helpful:
- Getting financial advice
- Savings
- Borrowing money
- Help with debt.
The Money Advice Service
The Money Advice Service is a free, independent service. Their website has lots of useful information about pensions including comparison tables for choosing a personal pension provider and a pension calculator for working out how much pension you'll need. There's also a range of leaflets to help answer your pensions and retirement questions.
Go to: www.moneyadviceservice.org.uk.
Directgov (in England, Wales and Scotland)
Directgov is the government website. It has lots of information about the State Pension and other types of pensions, including what to do when you are nearing retirement age.
Go to: www.direct.gov.uk.
nidirect (in Northern Ireland)
nidirect is the official government website for Northern Ireland citizens. It has lots of information about the State Pension and other types of pensions, including what to do when you are nearing retirement age.
Go to: www.nidirect.gov.uk.
The Pensions Tracing Service
The Pension Tracing Service (part of The Pension Service) can help you trace a pension you've lost touch with, even if you don't have all the details. Their contact details are:
Helpline 0845 6002 537
Textphone 0845 3000 169
Go to: www.secureonline.dwp.gov.uk.
The Pensions Advisory Service (TPAS)
Helpline: 0845 601 2923 local rate
Website: www.pensionsadvisoryservice.org.uk.
TPAS is an independent organisation that provides free information, advice and guidance about all types of pensions including state retirement pension, workplace, personal and stakeholder schemes.
TPAS doesn't provide financial or investment advice or recommend products.
The Department for Work and Pensions (DWP)
The DWP has produced some factsheets aimed at certain groups of people who may need help with planning for retirement.
If you're an unpaid carer, download the factsheet on claiming carer's credit.
If you've got divorced, download the factsheet Don’t let divorce dampen your retirement plans.
If your children have left home and you've more money to save for your retirement, download the factsheet Children flown the nest.
If you're thinking of living abroad when you retire, download the factsheet Important state pension information for UK ex-pats.
