Our top tips if you are worried about retirement

The best is yet to come. At least that’s how it should be. After many years of working hard, you deserve to feel excited about experiencing a fulfilling retirement. One focused on the things that matter to you. From going on more holidays, spending quality time with loved ones to enjoying your hobbies.

One of the best parts of my role as a financial adviser at Skipton Building Society is helping people retire with confidence. I love that moment where a customer discovers they can achieve what they want out of retirement, partly because of the financial plan we develop for them.

Unfortunately, not everyone gets to experience their ideal retirement. According to April 2024 research by Standard Life:

• Half of people who are retired regret their financial preparation.
• 51% wished they’d have had more information on how to plan for retirement.
• 42% rue not getting advice or guidance on planning their retirement.

I’ll be honest, I could be here all day giving you depressing statistics on the financial challenges of retiring. Figures about people cutting back saving because of the cost of living crisis. Why some fear they will have to delay when they retire. And how some people experience a shock over how little they’ve actually saved.

But I’d rather help you than worry you. So yes, not everyone gets it right and too many people are facing financial challenges in retirement. Yet by planning ahead and doing all you can to be ready, there’s no reason why your retirement can’t be something you can genuinely look forward to.

The sooner you start thinking about your retirement the better

The biggest tip I can give you today is to start doing more. If you’re many years from retiring, that doesn’t mean you should put off thinking about it. Even small tweaks to your financial plans now could make a big difference to your future.

What’s key is saving up for retirement now. Unless you work in the public sector, this probably means you have what’s called a defined contribution pension. This is where you – and your employer – pay money in, which is invested on your behalf.

I always tell customers to make the most of their workplace pension. If your employer is matching your contributions, you’re effectively getting free money for your future.

Another reason to pay into a defined contribution pension – workplace or your own – is tax relief. This means you get at least 20% extra into your pension, on top of what you pay in. If you’re a higher or additional rate taxpayer, you might be able to get 40% or 45% tax relief, providing you claim for it.

There are limits over how much you can pay into a pension each year. The rates are also slightly different in Scotland.

Why you should review your pension

Only 26% of pension savers know what their money is invested in. That’s according to March 2024 research by The Pension and Lifetime Savings Association. If you’re not sure yourself, chances are you’re in your pension provider’s default fund. This might not be as well suited to your personal circumstances as other options.

It’s also worth thinking about any old pension pots you might have

For example, if you’ve worked for different businesses over your career, chances are you’ve paid into more than one pension pot.

March 2024 figures from the Centre for Economics and Business Research (CEBR) show:

• There’s around 4.8 million pension pots that could be classed as missing.
• This collectively adds up to £50 billion at risk of being lost.
• Nearly one in 10 UK workers believe they could have a lost track of a pension pot worth more than £10,000.

It’s easy to overlook your old pension pots, but they could really boost your overall plans if you review them sooner rather than later.

The great news is, we can do this for you. We offer a pension review service where we can look at your pensions and even contact providers on your behalf. This allows us to build a detailed picture of your overall situation, and provide personalised recommendations for getting them into stronger shape before you retire.

Discover more about our pension review service

Preparing for retirement

So you’re paying as much as you can into a workplace pension, and you’ve reviewed all your arrangements. What else could you do?

Well at this point, I help customers to look further ahead at what they will need to achieve their desired retirement lifestyle. So we can check for any gaps. I’ve got some valuable tools that can help us to bring some of your unknowns to life.

For example, we can sit down together to map out your likely retirement income needs. From how much you’ll need to cover day-to-day bills, to exploring the costs of any bigger ambitions you have.

If it looks like you could benefit from doing more now to financially prepare for retirement, we can assess your options. It might mean setting up another pension to benefit from the tax incentives, or investing in another way.

Alternatively, we can look at any savings and investments you already have, to see if they could be doing more to support your financial future.

Start making a budget for your retirement

How to make confident decisions using your pension

When you eventually stop working, you will need to rely on your pension, savings and investments to fund your lifestyle. Chances are you will have the state pension, paid by the government, to support you as well. It currently pays £11,502.40 a year. On its own, it probably won’t give you enough to enjoy a comfortable retirement.

This is where having a plan for your money is so important. At the moment, you can access your defined contribution pension however you like from the age of 55. Only 25% is tax-free to withdraw (capped at £268,275 over your lifetime). You pay tax on the rest, in line with income tax bands. So if you take too much in one tax year, you could lose a chunk of your retirement fund to the taxman.

Skipton Building Society could help. Myself or another member of the financial advice team could help you to build a strategy for taking an income in your retirement. One which accounts for your situation and aspirations. Best of all, there’s no upfront fee to get your personalised financial plan. A charge only applies if you take up our advice.

The last few years of working are a key part of this planning. That’s why we believe it’s better you meet us sooner rather than later. The more prepared you are for the future, the better that farewell drink at your retirement party is going to taste.

Retirement advice

1. Take a look at other information we have about retirement planning.
2. If you want to learn more about financial advice, request a call back using the form below.
3. Our free initial consultation service will help you decide if financial advice is right for you – and ways we might be able to help you plan your future.

This service is available if you can invest or reinvest at least £20,000, or can commit to investing at least £500 per month. If you’d like advice on your current investments/pensions, the minimum value required is £50,000. For advice on building a retirement income strategy, you’d need at least £125,000 in savings, investments and pensions.