If 2025 is the year that you finally give up work and retire, you’re on the cusp of a huge life milestone. At the culmination of decades of saving, you’ll want to be sure that you’re fully prepared, financially and emotionally.
It’s a height of preparation that some pre-retirees are failing to reach. According to a recent MoneyAge report, the UK is on the “brink of a retirement crisis”, with just 15% of UK workers having clear goals for retirement.
Keep reading for seven important questions to ask yourself in the run-up to the big day.
1. Have I set my retirement date?
If you plan to retire next year, the first thing to do is set your retirement date. No doubt you’ve had a date in mind for some time – possibly for years – but it was never set in stone. The closer your retirement gets though, the more important this date becomes.
A definite goal gives you something to work towards. You’ll need to finalise arrangements at work, check in with your pension provider, and be sure that your long-held plans still align with your wishes.
Psychologically, this is much easier with a definite finish point in mind.
2. Will my retirement be phased or a “cliff edge”?
When your retirement was decades away you might have imagined a cliff-edge: full-time work one day followed by full retirement the next. Now that you’re here, the reality might be different.
Maybe you worry about how a sharp cut-off will affect your social life or how you’ll keep your mind sharp and your body active without the daily stimulus of work.
If a phased retirement is suddenly seeming more attractive, now is the time to set those wheels in motion. Think about what a phased retirement might look like for you. Maybe it means slowing down through a move to part-time hours or the brand new challenge of a change of role, into consultancy, say.
Ask yourself these important questions now, before it’s too late.
3. Have I saved enough to last the rest of my life?
The majority of retirement questions you ask yourself will likely boil down to the same point: “Do I have enough?”
Tangled up in this question is another: “How much is enough?”
Sadly, there are no easy answers. That’s why the long-term planning process is so important.
Throughout the last few years, or even decades, we’ll have helped you to think about:
- The type of retirement lifestyle you want to lead and how much that might cost
- When you can afford to retire and how long your retirement might last
- How you might access your funds and how to ensure you budget efficiently.
If you’ve stuck to your plan, you’ll likely be on course to live the lifestyle you want, with money put aside for emergencies, and enough left to leave a legacy. If you want reassurance that this is still the case, get in touch.
4. Do I know how to successfully manage withdrawals?
Budgeting effectively throughout a long retirement isn’t easy.
Your spending is unlikely to be static. You might spend more in the active years of retirement before slowing down and beginning to spend less. In later life, care costs might drive your expenditure up again.
On top of that, external factors like inflation or stock market movements can affect the withdrawals you make.
During periods of high inflation, your income won’t stretch as far, while market downturns could see you selling more units to receive the same amount.
The pension decumulation stage is tough but you must get it right, which is why we’re on hand to help.
5. Have I balanced flexibility with known and regular income?
One way to manage your pension decumulation is to opt for a mixture of flexible and regular income.
An annuity offers a guaranteed income for life, which makes budgeting with that portion of your pension relatively easy. It might also free you up to be more flexible with the other pensions you hold, or the retirement income you have from other sources.
Be sure to research all pension options open to you and remember that you don’t need to choose just one.
6. Do I have a safety net?
While you were working, we’ll have encouraged you to maintain a safety net in the form of an emergency fund. Usually equivalent to around six months of household expenditure, it’s designed to keep you afloat should the unexpected strike.
Once you stop work, you’ll need to maintain this fund. In retirement, you’ll be reliant on your pension income and the other savings and investments you hold, but unexpected costs could still arise and life events can change your priorities.
You need to ensure your finances are robust enough to cope. Check in with your emergency fund in the months leading up to your retirement, if not before.
7. Have you sought professional advice?
There’s a great deal to consider in the run-up to retirement and many of the decisions you make will have long-term consequences. Despite this, a recent report suggests that many are entering retirement without ever consulting a financial advisor.
FTAdviser recently found that the number of Brits accessing pension funds for the first time rose by almost 20% in 2023/24 compared with the previous tax year, but less than a third took financial advice.
You understand the value that advice adds, helping you to make the best decisions for you, based on your long-term goals and the lifestyle you want to live while factoring in later-life concerns like paying for care and the legacy you leave behind.
Get in touch
If you’re all set to retire in 2025, be sure to get in touch and we can help you plan the all-important transition from work to retirement and begin to help you think about managing your income now and for the rest of your life.
Please email hello@globeifa.co.uk or call us on 020 8891 0711 to discuss how Globe IFA’s expert financial advisors can help you manage your long-term financial plans.
