Planning for a comfortable retirement

Sorting out your money for retirement is more complicated than arranging to have your pension paid into the bank after you give up work. Pensions come with lots of options and making the right financial choices for you may mean talking about your plans for later life with a professional adviser.

Moving money can take time and planning to avoid tax and charges, so do not leave your decisions until the last minute – and that can mean starting to think about retirement money a year or two before you intend to give up work.

Many people approaching retirement tend to concentrate on how they will spend their time rather than financial issues, so here are some important points to think about:

How much money will you have?

You cannot consider what you will spend until you know what your retirement budget is likely to be. Start putting the paperwork together. You will need a state pension forecast, personal pension projections, and statements for saving accounts and details of any investments. Tot up the income they pay to get some idea of your regular monthly income when you retire.

Work through this helpful retirement planning checklist

Don’t take risks

Shift your cash from risky shares and funds into gilts and bonds. They may pay less, but the danger of losing money you need to fund your retirement is less.

Become your own bank

Don’t borrow, instead, pay off cards and loans and build up a cash reserve. Instead of borrowing, take the money from your own cash but make sure you repay the loan with interest. Pay off the debts with the highest interest rates first.

Talk with an adviser about borrowing from your pension to pay down debt – you may reduce what you owe but you will also reduce the income you receive once you retire.

Track your spending

Have a budget – record what you planned to spend, what you spent and the difference between the two. After six months or a year, use the data to draw up the budget based on evidence rather than guesswork.

Set a date for retirement

Setting a date for leaving work gives you a target to work towards – make the goal realistic but not rigid. Providing you have your health you can do a little part-time work to ease your budget.