10 years or more to go: take aim at your retirement
Start stashing some money away into a pension fund over a decade before your retirement so it has time to accumulate and gain interest.
‘If you're 10 years away from when you think you might retire, make sure you assess how much money is in your pension fund and whether you can afford to increase contributions,’ says Baroness Ros Altmann.
It’s never too early to work out what sort of retirement you want. In fact, the earlier you start, the more you can prepare. Begin by asking yourself some questions:
- What do you want out of your retirement?
- How much will you need to achieve it?
- How much should you save to reach that target?
If you don’t have a workplace pension, set up a personal pension – aim to have 60 percent of your pre-retirement income per annum to live comfortably.
Five years to go: decide when you want to finish working
At this stage, it’s time to make some important pension checks:
- Take a look at how much your pension pot is worth
- Check your state pension age on the government's website (but remember, you can continue working after that age if you'd like to)
- Determine when you want to retire
If you need to, you can start taking money from your pension from when you're 55 to supplement your income, for example, if you need to work reduced hours.
You may have a good idea of your pension pot by now, but what about your other investments? Check all your savings accounts and investments to make sure your money is doing the most it can. If the APR is better in one savings account than another, move your money across.
One year to go: time to get serious
‘If you're one year away from retiring you need to plan how you will manage to live once your earnings stop,’ says Baroness Ros Altmann.
The former Minister of State for Pensions recommends you ask yourself the following questions:
- How much have you got in your pension fund?
- Can you pay in more?
- Do you want to consider downsizing your house?
Have you checked what income you will get from your pensions? If you haven’t already, track down all your pensions – not just your state pension and current employee pension, but also any from previous jobs or even countries.
If you're downsizing, start property hunting early. If you don’t want to invest your money in any more assets, it might be an idea to rent rather than buy somewhere new – that way, your money isn’t tied up in property if you need to access it quickly.
Six months to go: look forward to your free time
Not long now! It could start to get very exciting at this point, especially if you have plans to go on holiday or spend some quality time with friends and family.
But first things first: contact your scheme provider to get a pension forecast so you know what to expect in retirement. Next, check what your state pension
is worth and consolidate both amounts to work out an estimate of your total (after all, you may have other investments). When you know your total, seek out expert guidance to make sure you get the most out of your pension pot.
Find out when each payment will arrive in your bank account. If your state pension drops in a couple of days before your energy bill payment is due, then you could allocate part of it to paying this bill off.
Work out an exact date and share the news. As well as your friends, family and employer, you should let HMRC know what day you’re retiring – at least four months ahead of the day – to be certain your first pension payment will arrive on time.
Retirement: nearly time to put your feet up
You’ve retired! Don’t take a rest just yet, though: you now have more time to really assess your options.
Due to changes in legislation in April 2015, you have greater choice over what to do with your pension pot 
. However, before you start making any withdrawals, it's important you take appropriate retirement financial advice.
- Buy an annuity: you take 25 per cent of your pension tax-free as a lump sum and the rest as taxable income, which is guaranteed for life. Shop around and speak to a professional adviser to make sure you get the best deal. Be honest about any illnesses to benefit from enhanced annuities.
- Flexi-access drawdown: you take a 25 per cent lump sum tax-free and re-invest the rest into funds, taking income accordingly. You can set and adjust the income you want. Unlike annuities, the income is not guaranteed for life and the investments must be managed well.
- Take small amounts of cash: you can take small amounts of cash from your pension pot as and when you want and leave the rest untouched. 25 per cent will be tax-free, but other withdrawals are taxed in the usual way. Your provider may charge you for withdrawals and there may be limits.
- Cash the lot: new pension freedom rules means you can cash in your entire pension pot. 25 per cent will be tax free and the rest will be taxed. If you cash in your pension pot, consider the financial implications - you will not get a regular income so you need to manage your money accordingly.
Alternatively, you can mix and match your options to suit your circumstances. Whatever you do with your money, make sure you remain vigilant – many retirees have been scammed out of money after falling for one-off unreal deals for upfront cash. Follow The Pensions Regulator’s ten step guide to make sure you don’t become a victim.
For more personal finance ideas and resources, follow Kalpana Fitzpatrick on Twitter @KalpanaFitz.
 HM Revenue and Customs, 2015. Pension changes 2015, GOV.UK https://www.gov.uk/government/news/pension-changes-2015