Preparing to retire?

Understanding your choices

At aged 50, retirement could be as little as five years away. But whether you’re planning to retire then, or in many years’ time, we’ve put together some of the key points you might want to consider about your pension.

Did you know?

44% of retirees depend on the State Pension as their main source of income.*

*https://www.fca.org.uk/publication/research/financial-lives-consumers-across-uk.pdf

Understanding your choices

You could start to enjoy retirement from as early as age 55. But whether you’re planning to retire then, or in many years’ time, we’ve put together some of the key points you might want to consider about your pension.

What are my options?

When you decide that the time is right to take your money out of your pension, you can:

  • Turn it into a regular taxable income (annuity), so you can always be sure of what you’ll get.
  • Take lump sums (25% tax free) and taxable income from your pension pot as and when you need and leave the rest invested.
  • Take your whole pension pot as a cash sum of which 25% would be tax free but the remaining 75% is taxed along with any other income you may receive.
  • Leave it where it is and continue saving.

Did you know?

It’s a good idea to work out roughly what you’ll need each month when you retire (thinking about bills, leisure activities, holidays, family commitments etc.). Many people find the state pension alone is not enough.

Scottish Widows pension options calculator lets you see how much your pension could be worth, which can help you to decide when the time is right for you to retire.

Your questions answered

  • There’s more flexibility about when you retire than ever before. Generally speaking, if you’ve saved into a workplace or private pension, once you reach 55, you can start taking your money out, but you can also choose to leave it where it is and let it grow a bit more.

    As well as financial considerations, other issues may affect your decision, for example, whether you enjoy your job and can physically manage its demands, and your health. You may even find that a phased approach works best for you, reducing your hours from full to part-time.

  • On average, £24,000 a year is the golden number when it comes to planning for a comfortable retirement.* Our pension options calculator lets you see how much your pension could be worth, which can help you to decide when the time is right for you to retire.

    *https://www.scottishwidows.co.uk/retirement/retirement-explained/approaching/can-you-afford/

  • Start by working out how much you already have in savings, investments and pensions to put towards your retirement. Your pension provider or administrator should be able to give you an up-to-date statement of what your pension could be worth at the retirement age you originally selected. You can also find out what State Pension you’re entitled to. As a part of Lloyds Banking Group, Scottish Widows offers pensions and advice. See how they can further help you understand your options.

  • On average, a person will have multiple jobs over the course of their working life. If you’re part of a pension scheme at each job, that means you could end up with pension pots all over the place. If you’re self-employed, you may have different pension pots depending on if you’ve worked for a company or pay into accounts privately.

    You can choose to combine your pension pots or keep them separate, but it’s worth considering the pros and cons of each option carefully. Keeping tabs on your different pensions is also important, with estimates that there is almost £20bn in ‘lost’ pensions outstanding*.

    * ABI.ORG.UK

    Visit the pension transfer pages to find out more.

What should I do today?

Scottish Widows have been helping people plan for retirement for over 200 years. As a part of our Group, they can help you to understand whether your plans are workable to give you the retirement you want and help you make the best decisions for you.

To find out more about pensions.

Visit the Scottish Widows website

If you’d like to combine your pensions we can help.

Visit our pension transfer pages

Tools and resources

Pensions Transfer - if you have more than one pension pot you could combine them into one plan to make them easier to manage

Pensions Transfer

Handy Tool - if you’re approaching retirement, review your pension options with our pensions provider Scottish Widows and see how you could benefit

Pensions Calculator

Wealth Management Service - if you feel that you’d benefit from some financial advice to plan your retirement, we can help.

Wealth Management

Will Writing – to ensure your assets and loved ones are protected in the future it is important to have a will in place which we can help with.

Making a Will

Pension Basics – These bite size films are filled with useful information to help you plan for retirement.

Pension Basics

Looking for further help?

Visit Pension Wise from MoneyHelper for guidance on your options. They offer appointments over the phone or in person, to help you understand your financial situation when you retire.

You might also want to talk to a financial adviser. Find one near you.

Important legal information

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