What to Do 5-10 years Before Retiring

Retirement can feel like a far-off event, and it’s easy to put off thinking about it. But as the years creep closer, it’s natural to wonder: Am I ready? Will I have enough?

So, Joslin Rhodes is here to help. Because retirement isn’t just about reaching a certain age; it’s about making sure you’ll be comfortable and happy when the time comes.

In this week’s blog, we’ll share our top tips and strategies on what you should be doing, or thinking about, in the 5-10 years before you retire.

Assess Your Financial Situation

It’s important to check your financial situation, especially when it comes to your pensions. By looking at both your State Pension and private pension plans (including Self-Invested Personal Pensions), you can figure out how much money you have now and what you might get in the future.

With private pensions, your provider usually sends you a yearly statement showing how much you’ve saved. If you haven’t received one, just ask, and they will send it to you. Understanding this helps you estimate what your retirement income might look like.

For your UK State Pension, you can check online for your State Pension forecast to see how much you’re likely to get and when to help you plan ahead. Understanding your State Pension can be challenging, so be sure to check out our blog for a clear breakdown of the basics: Your Guide to UK State Pensions.

As you get closer to retirement, it’s also important to look at your savings, investments and any other assets you have. If they are high-risk or were set up when your tolerance to risk was a bit higher, it may be time to consider shifting to more stable options. This can help reduce potential losses and provides more security as you approach the time you’ll need to rely on your savings. But, as always when it comes to investing, you should consult with a qualified Financial Adviser, to ensure that any changes are suitable for your personal circumstances.

By regularly checking your financial situation and understanding your pension options, you can make smart decisions and plan effectively for your retirement.

Pay Off Debts

Debt can be a big problem when it comes to retirement. It’s important to break from the norm and look at ways to pay off your debt before you retire. Being in debt can be stressful and hard to escape, which can affect your pension and financial security later on. But remember, you’re not alone. According to The Money Charity, people in the UK owed £1,843.9 billion at the end of March 2024.

When you retire, your income usually becomes fixed, coming from pensions and other savings you’ve built up. This means you’re unlikely to have more money tomorrow to pay off your debt, than you do today. So, it’s crucial to focus on paying off high-interest debts like credit cards and personal loans now. Clearing debt before retirement allows you to spend more of your income on enjoying life rather than paying off bills.

One worthwhile goal could be to pay off your mortgage before you retire. This can greatly reduce your monthly expenses and give you peace of mind. Carrying debt into retirement means you’ll end up paying more in interest, potentially wasting money each month.

If you’re within 5 to 10 years from retirement, you still have time to tackle your debt. Now is the time to act! For those in debt and wondering if their pension can help, read our blog: “Debt Relief Dilemma: Is Your Pension the Answer?”

Set Clear Retirement Goals

When asked, “What do you want to do with your retirement?” it can feel like an overwhelming and broad question, requiring a lot of thought. People often focus on big-ticket items like travel or luxury purchases. And while this is important, you also need to factor in everyday essentials, such as groceries, utility bills, and transportation costs.

To make this manageable, you can break down your retirement expenses into smaller, more digestible parts – and if you need help, our Financial Planners can assist with this process.

We’ll ask specific questions like, “What does retirement look like for you?” and “Do you plan to travel, start a new hobby, buy a new car, or even relocate?” This approach helps you list all potential expenses, from daily living costs to travel and healthcare, providing a clear understanding of your retirement needs. Setting clear retirement goals helps you plan effectively, ensuring a secure and fulfilling retirement.

After all the happiest retirees have a purpose and focused interests!

Check your National Insurance Records

Ensuring you qualify for the State Pension requires careful attention to your National Insurance (NI) contributions. You need at least 10 years of contributions to be eligible for any State Pension and 35 years to receive the full amount. It’s important to regularly check your NI record for any gaps. If though, you do discover gaps, you can consider making voluntary contributions to boost your State Pension.

The amount you receive depends on how many years you’ve paid NI contributions. So, if you have between 10 and 34 years of contributions, you’ll still receive a State Pension, but it will be adjusted based on your qualifying years.

Gaps in your NI record can occur for various reasons, such as taking care of family members, illness, or low earnings.

This is a common issue, so you’re not alone. To check for any gaps, you can create an account on the GOV.UK website and review your NI record for any incomplete years since 2006.

Maximise Your Pension

If retirement is on the horizon, it might be worth maximising your pension contributions in the final years before retirement.

Although contributing more each month means less take-home pay in the short term, it helps grow a larger retirement fund for future income.

Making extra contributions in the years before retirement also gives you immediate tax relief benefits. Think of it as “topping up” your pension.

The more you save into your pension, the more money you’ll have to enjoy in retirement.

It’s also worth asking your employer if they will contribute more. Some employers will match your increased contributions. For example, if you add an extra 1%, they will also add an extra 1%, up to a certain limit.

Read more about boosting your retirement savings: Worried about running out of money in retirement?

Stay Informed On Current Events

Government decisions may significantly impact your retirement plans in the short term, especially with the upcoming election. While none of us can predict the outcome, it’s crucial not to panic.

Rather, there are proactive steps you can take:

• Stay Updated: Keep yourself informed by following reliable news sources and official government announcements. This can simply be reading newspapers, listening to the radio, or watching the news.
• Contact Your Pension Providers: Reach out to the companies managing your retirement savings. Whether you need updates on your pension status, want to discuss investments, or have questions about your funds, they’re there to help you manage your financial future effectively.
• Consult Professionals: Seek advice from the experts. If you’re worried about how changes, like the election or a shift in the State Pension age, might affect your pension, don’t hesitate to reach out to us at Joslin Rhodes. We’re here to assist you and can talk you through any concerns you have about how these changes could impact your retirement savings.

Plan For Unexpected Costs

Getting older can be challenging and often comes a lot of unexpected costs that can put a strain on your finances. For this reason, it’s best to always plan for things like long-term care expenses or healthcare emergency costs. Having an emergency fund during retirement is as crucial as it is during your working years.

Here’s a few examples of what you could consider when planning for unexpected costs:

• Healthcare Expenses: When you have a sudden medical problem or need long-term care, it can cost a lot for treatment.
• Home Repairs and Maintenance: Older houses might need fixes like getting a new roof or fixing plumbing issues.
• Vehicle Repairs or Replacement: Sometimes your car might need repairs out of the blue, or you might have to buy a new one, which can be pricey.
• Family Support: You might find yourself needing to help out family members financially, like adult kids or grandkids, which can come up unexpectedly.

Speak with the Experts

Planning for retirement might seem intimidating, but a Financial Adviser can make it easier. At Joslin Rhodes, our friendly Teesside based Pension and Retirement Planning experts can offer personalised advice on things like taxes, investments, and pensions. And, by meeting regularly, you can keep your retirement plan in line with your goals, even as life changes.

If you feel as though you need advice, we’re here for you. Simply tap here to book your FREE one-on-one meeting at a time convenient for you.

If you would prefer, you can also attend one of our FREE Pension & Retirement Planning workshops for insights into different pension types and strategies for securing your desired lifestyle in retirement.

Joslin Rhodes Pension & Retirement Planning – Real Advice, For Real People