4 tips for women approaching retirement

business men and women

Four tips for women, and men, approaching retirement to ensure financial stability.

Here we share four tips both women and men can take during the few years approaching retirement to help ensure that you make the right decisions, as mistakes at this stage can be costly. Sacha Williams, Kingswood Wealth Planner discusses her top four tips.

Recent research from The Equity Release Council among workers in the 55+ age group showed increasing concerns among both men and women about their retirement plans and whether they can afford to retire.

It appears to be working women approaching retirement, are showing the highest level of anxiety, both about affording retirement and the impact of future poor health and long-term care funding.

1. Assess your current financial situation

Do you have outstanding debts to pay off?  If so, perhaps you can start a plan now to become debt free before your retirement age. Generally, it is better to start with the most expensive debts first (usually credit cards), then bank loans.  Lastly, can you repay your mortgage sooner, especially as interest rates are starting to rise.

Working out your monthly spending is also important at this point: if you don’t know how much you spend on average, you will not know how much income you need when you retire.  You also need to consider if retirement will change your spending needs, for example ask yourself if you plan on traveling more or taking up costly new hobbies.

2. Assessment of your pensions

By this stage, you may have had a number of jobs over the years and collected a few pensions along the way.  Some old occupation schemes do not send you regular statements so you may have forgotten about them.  When moving addresses, it’s important to update your pension provider – we would recommend checking if you’ve remembered to do this over the years.

Think through all your old employers and whether you joined the pension scheme.  If you no longer have paperwork for old pensions and do not know who to contact, you can get information from the Pension Tracing Service.

We would also suggest that you obtain a record of your National Insurance Contributions (NIC) and a projection of your State Pension now too.  If you are within a year or two of retirement and have any gaps in your NIC, you can usually make back payments to buy extra years contributions which can increase your State Pension.

3. Retirement Income Planning

Once you have the information about all your company, private and State Pensions, check the retirement ages and projected incomes.  How does this compare to your monthly spending budget and future plans?  Does the Normal Retirement Age of any occupation plans suit you, or do you want to retire earlier/later?  If this is the case, you may want to contact the Pension Trustees to see if the pension age can be changed, and if so, what would the impact be on your income.

It is also worth looking at other savings such as ISAs, it may be more tax efficient to use these to provide income after you retire.  Are most of your savings in bank accounts or cash ISAs?  If so, perhaps you should consider investing some of your savings now for higher growth over the next 5-10 years.

Most pensions offer a tax-free lump sum when you initially retire, ask yourself whether you plan to use this for one off expenses on retirement, such as replacing your car, or invest it for income throughout retirement, perhaps into stocks and shares ISA.

Traditionally, you do not need to retire before you can claim on your pensions, so you could also think about whether you want a change of career or to work part time for a few years.  Some people prefer to gradually ease into retirement over a period of time.

4. Get Advice

This is a time in life where a mistake could be very costly.  Firstly, you should not accept an annuity from your pension provider without shopping around.  Even if you are sure that an annuity is suitable for you, rates can vary hugely between insurance companies, especially if you have certain health conditions, so it is worth speaking to a Financial Adviser to see if you can get a better rate.

You can also contact Pension Wise which is a free and impartial service to help you understand what your pension options are.

Although financial advice can sometimes seem expensive it can save you a lot of money in the long term. For women approaching retirement, we understand it can sometimes seem daunting, but we are help. Get in touch with us to talk about your retirement options.

By Sacha Williams, Wealth Planner