If you‘re in your 40s or 50s, retirement might seem a long way off. But planning now could give you more choice about how and when you want to retire.
For example, you might not want to retire completely, choosing instead to work part-time, or you might want to withdraw part of your pension and dip into it later as and when you need it.
Historically, the state pension age for men was 65 and 60 for women. From 2020, both men and women's state pension age will be 66, increasing to 67 between 2026 and 2028, and then linked to life expectancy.
The government has said it will review the state pension age every five years after that.
For many people, the biggest change to pensions is that they're no longer forced to turn their pension cash into a fixed income for life, known as an annuity. Instead, they can dip into their pension fund and take out cash on an as-needs basis.
The new rules allow them to take 100 per cent of their pension in cash, although this would land them with a potentially large tax bill.
Under the new rules, you're allowed to:
'For anyone within 15 years of retirement, they need to think very carefully about what they wish for in the future when they intend to finish work,' says independent financial adviser Philip Pearson, director of P&P Invest.
'Relying upon the State for your income in retirement is not an option, which most people would wish to look forward to,' he says.
'Take stock of where you are now financially and what your objectives are for your retirement. If interest rates remain low over the long term then this will have a devastating effect upon the amount of income available from a pension plan.'
He suggests you set an ideal date when you wish to finish work, consider carefully how much income you'll need in today’s terms and review your existing savings and investments. It’s a good idea to review your plan each year.