After decades of pension contributions, you want to be confident that you have enough to achieve your retirement goals.

Even if retirement is just a few years away, it’s not too late to boost your pension pot. By being proactive, you can help ensure your pension will support your ideal lifestyle.

To help you get started, read our checklist for readying your pension for retirement in your final decade of work.

1. Track down all your pension pots

As you approach retirement, it’s important to understand how much you have saved.

Throughout your career, you may have accumulated several pension pots, with each employer potentially having their own scheme.

Over the years, it’s easy to lose track of these pensions and how much is in each. In some cases, these can add up to a considerable sum. With compound growth, even pensions containing a relatively small amount when you stopped contributing could have grown much larger over time.

By identifying all your existing pensions, you can gain a clearer view of your savings so far.

In some cases, you might consider consolidating schemes into a single pot. Not only can this simplify your pension admin, but it can also reduce your fees. However, consolidation may not be appropriate in all cases, so it’s worth discussing with us before transferring any funds out of a pension.

2. Check projected income v target

Ideally, you should know how much you need saved for retirement.

As discussed in our recent article, a comfortable retirement could cost a couple over £64,800 a year. However, your actual costs will vary depending on your lifestyle goals and the impact of inflation.

You may have set a savings target earlier in life, when you first started retirement planning. To make sure your target is still relevant, it’s important to revisit your plans and check that they align with your current goals and the cost of living.

Consider how much income you’ll need in retirement to maintain your desired quality of life. Then, look at your current position and the level of income you could draw from your savings, and see whether this aligns with your target.

With a firm idea of how much you have saved so far and an estimate of your projected costs in retirement, you can calculate how much further you need to grow your pot to achieve your target income.

3. Review your contribution levels

If the above analysis exposes a gap between how much you’re saving and the amount you need for retirement, you may wish to review your contribution levels.

Remember: even if you’re close to retirement, it’s not too late to boost your pot.

You may be able to divert other savings or excess income into your pension relatively easily. Otherwise, you may need to review your household budget and make some small lifestyle sacrifices to set aside the funds you’ll need in retirement.

Alternatively, you may find that your savings are already on track to achieve your goals. In which case, consider whether there are other areas of your financial plan you could focus on. For example, you might prioritise repaying your mortgage or building your emergency fund.

It’s worth noting that your pension pot is usually inaccessible until you reach the minimum pension age, which may vary depending on your scheme or where you live. So, if you’re likely to need the funds sooner, you might opt to save more outside your pension.

4. Understand your investment risk as you near retirement

In the decade before retirement, it’s important to carefully review your pension investment choices to ensure they align with your risk appetite and drawdown strategy.

Sometimes, your pension savings may be automatically moved into lower-risk funds as you near retirement. This strategy – known as pension lifestyling – aims to shield your fund from market volatility and prevent the value from dropping right before you retire.

However, this may not necessarily be a suitable strategy for your needs. Some retirees prefer to leave their pension pot invested, taking only what they need while the rest continues to grow. Depending on your preferences, you might therefore prefer to take on a little more risk to potentially achieve higher growth and ensure that your pot lasts throughout retirement.

On the other hand, if you intend to purchase an annuity (more on this later), you might prefer to minimise risk.

Whether you prefer to reduce risk as you approach retirement or prioritise growth opportunities, you need to have a strategy for how your fund should be invested – rather than just accepting your pension scheme’s default.

5. Plan a sustainable retirement income

Once you know how much you have saved and how much you’re likely to spend throughout retirement (as described above), it’s important to create a strategy for drawing a sustainable income.

Without a clear plan to pace your pension savings throughout your retirement, you could risk overspending early on and running out of money later in life.

Having an income plan can give you the peace of mind you need to enjoy your retirement without money worries. You might choose to:

• Draw down an income directly from your pot, with payments planned to avoid overspending or oversaving.
• Purchase an annuity for a guaranteed income.

Learn more: Is an annuity the right choice for you as rates reach near-decade highs?

There isn’t a one-size-fits-all solution for drawing an income in retirement, and you may opt for a combination of annuities and drawdown. By planning ahead and having a clear strategy, you can ensure your savings, contributions, growth, and retirement income are all aligned to support your goals and ideal retirement lifestyle.

Get in touch

For further information about retirement planning, you can email enquiries@rfsl.co.uk to learn more. Alternatively, call 01534 502000 in Jersey or 01481 747940 in Guernsey to discuss how we could support you.

Please note

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

A pension is a long-term investment not normally accessible until 50. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change.

Rossborough Financial Services Limited is regulated by the Jersey Financial Services Commission under the Financial Services (Jersey) Law 1998 and licensed by the Guernsey Financial Services Commission.