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Planning Retirement Online

Retirement Finance Checklist

What you need to do as you approach retirement

As you approach retirement there are a number of things you need to consider and decisions you will need to make in regard to your finances, some of which can have a dramatic effect on the level of income you receive in retirement.

The objective is to consider each aspect of your retirement income and how much you expect to receive from various sources and how much you need to support the retirement lifestyle you want.

Income Checklist

  • Understand what decisions you will have to make regarding turning any pension funds you have built up into a pension income. In particular read our section on putting a pension into service. The following items assume you have read this:

    • Six to three months before the retirement date set in your pension scheme you should receive an annuity quotation pack from your provider/s. However you can get a head start by contacting them earlier and requesting a quotation.

    • There are a variety of options associated with an annuity such as escalation and survivor benefits. Discuss the options with your partner (if appropriate), and ask your provider/s for a number of different scenarios that interest you and that will help you to make a decision. Make sure you read our section on inflation before doing this.

    • As part of this consider your health and your partner's health (if appropriate) and whether there is anything that if declared could lead to an 'enhanced' or 'impaired life' annuity rate. Don't forget this could increase you pension income by as much as 50%.

    • If you have more than one pension can you achieve a higher income by consolidating your pensions with the best provider?

    • If you have lost track of a pension you can use the pension tracing service at: and they will help you to track it down.

    • Investigate the Open Market Option to ensure you are aware of the best providers and the best annuity rates available. Don't forget this could make as much as 20% difference to the income you receive.

    • The 2014 budget has opened up the prospect of additional options becoming available from April 2015 including full withdrawal of pension funds (at marginal rates), an annuity or drawdown and potentially other products created by providers.

  • Associated with the above decisions make sure you have read theLump Sums and decide whether or not it is to your advantage to take one.

  • Obtain a state pension forecast

  • Decide, in the context of your overall prospective income, whether there is any advantage to you in delaying taking the state pension, as this will now increase if you defer it - see
    When you are within 4 months of retirement you can apply to claim your state pension. You should receive details of how to do this several months before you are eligible but if not you can go to which will tell you what information you need to do this and enable you to apply over the phone or online.

  • Look at your investments and non-pension assets and their ability to generate income, especially if that income is tax free. As part of this consider whether it could be more beneficial to draw income from non-pension assets initially, because pension income is taxable at your highest rate. For example it could be beneficial to do this and take an escalating annuity.

  • Don't forget that your income will go further once you stop work i.e. no National Insurance on earned income and even if you do decide to work part time, once you are past state pension age, any work you do won't require you to pay NI either.

The above steps should give you a picture of your overall income situation and bring out many of the decisions you need to make. However do consider whether you need independent financial advice to help you understand your options and make the decisions, as the decisions you make now are amongst the most major you will ever make, and will affect the rest of your life.


Start by considering what sort of retirement lifestyle you want because at the end of the day the retirement lifestyle we want, determines the income we will need in retirement. If you haven't done so already, then see '2-3 years before retirement' in our Timelines section which will ensure you think about the sort of lifestyle you want to have and set your financial plans within that context.

In addition to day to day expenditure, which will of course change (no work associated costs such as travel and lunches), consider any new expenditure you might have e.g. more frequent holidays, or major expenditure such as a new car, children's weddings etc. Also consider any other reductions in expenditure e.g. mortgage paid off, kids off your hands.

At the end of the day the retirement lifestyle we want, determines the income we will need in retirement. If our projected income won't support all of those lifestyle aspirations then we have a choice: either we will have to modify some of the aspirations, or perhaps decide that it is worth working part time to generate some additional income to allow us to do those things and instead have a phased retirement.


If you haven't already read then, make sure you read our guides to Putting a pension into service and to Lump Sums

However if you feel that you need some help from a financial advisor, then visit our section on obtaining financial advice, or our page on Laterlife selected services and associated advice.


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