Coming up to retirement

What do you want to do when you retire?

• Will you be able to afford the retirement you want? Use this simple calculator to work out what income you might need to fit with the lifestyle you want.

Will you have enough to financially support yourself in retirement? Take our four-step check

1. Check your statements or login to see how much income your plan might provide.

2. Find out how much State Pension you might receive and when you might receive it. Your State Pension depends on how many years of National Insurance contributions you've built up. You can make extra contributions to fill in any 'missing' years.

3. Check any other retirement plans you have, perhaps you’ve forgotten about some, plus any other savings. If you have more than one plan you may be able to combine them. Before consolidating however, you should check you're not giving up any guarantees, benefits or incurring any charges. In most cases you are likely to be worse off if you transfer out of a defined benefit scheme, even if your employer gives you an incentive to leave.

4. Add them all up to see the total income you might receive.

Need to boost your savings?

• If you can, increase your regular payments. This may mean your employer will increase their payments too.

• Consider making lump sum payments if you receive a bonus, windfall or inheritance. Putting any surplus ‘rainy day’ money into your retirement savings plan is another way of boosting your savings and you usually get tax relief on any payment.

  Even if you only have five years until you reach retirement, it's not too late to do either of these - and you may benefit from tax relief.

Want to reduce the risk of your savings taking a sharp fall in value?

• Review your investment choices and consider moving at least some of your savings into funds with less risk. With less time for your savings to recover from potential market downturns, most people start to move some of their existing savings in to funds with less risk as they approach retirement. If you are invested in a lifestyle strategy, your savings will be automatically moved into funds with less risk – check this is what you want.

  There are a range of lifestyle strategies. If you're invested in one, you should regularly review that it still reflects how you feel about risk and what you hope to do when you come to retire. Five years from retirement is when many lifestyle strategies start to move into investments that reflect how you plan to take your benefits when you retire. It's therefore important that this is still up to date at this point.

Other important things to do:

• Write a will or review your existing will to ensure you protect your wealth.

• Check what happens to your retirement savings plan if you die. Ensure you’ve nominated your beneficiaries.

• If you’re unsure what action to take - seek help. There’s information on this site and we’ve provided links to other sites to help you. If you’re still unsure and need advice, your employer or Scottish Widows can’t provide advice, but you can speak to a Financial Adviser. You will be charged for any advice. If you don’t have an adviser, you can find one at unbiased.co.uk or vouchedfor.co.uk. If you are 50 years or older, you can also get free guidance from Pension Wise at www.pensionwise.gov.uk.

Will you have enough to support you financially in retirement? Take our five-step check

1. Check your statements or login to see how much income your plan might provide.

2. Find out how much State Pension you might receive and when you might receive it. If you take your retirement savings before you are able to take your State Pension you need to think about what effect this might have on you. Your State Pension depends on how many years of National Insurance contributions you've built up. You can make extra contributions to fill in any 'missing' years.

3. Check any other retirement plans you have, perhaps you’ve forgotten about some, plus any other savings.If you have more than one plan you may be able to combine them. Before consolidating, however, you should check you're not giving up any guarantees, benefits or incurring any charges. In most cases you are likely to be worse off if you transfer out of a defined benefit scheme, even if your employer gives you an incentive to leave.

4. Add them all up to see the total income you might receive.

5. How much income do you need? Use this simple calculator to work out what income you might need to fit with the lifestyle you want.

Need to boost your savings?

• If you can, increase your regular payments. This may mean your employer will increase their payments too.

• Consider making lump sum payments if you receive a bonus, windfall or inheritance. Putting any surplus ‘rainy day’ money into your retirement savings plan is another way of boosting your savings and you usually get tax relief on any payment. This may mean your employer will increase their payments too.

• When is the right time to retire? If you want to retire later, you can leave your retirement savings invested in your plan. It’s very important that your records show the correct selected retirement age, particularly if your savings are in a lifestyle strategy. This is because your money is moved into low risk funds with lower growth potential as you near retirement and their value may not keep up with inflation.

Want to reduce the risk of your savings taking a sharp fall in value?

• Review your investment choices and consider moving in to lower risk funds such as those that invest mainly in bonds or money market funds. You should consider moving your investments to help defend against an unexpected fall in value as this will reduce your income.

Choosing what to do with your retirement savings

There are lots of choices available on what to do with your retirement savings. Please visit our dedicated retirement area for information, guidance and a range of simple tools to help you plan your retirement and consider the most suitable retirement option for you.

GUARANTEED INCOME FOR LIFE

• Secure lifelong income: you can use some or all of your retirement savings to buy a guaranteed income for life, also known as an annuity. You will know how much you will get and it is payable for the rest of your life.

There are a number of different options as to what type of annuity you buy including:

• Level annuity where your income stay the same;
• Guaranteed period which means any income continues to be paid even if you die;
• Joint annuity that is paid to your spouse, civil partner or dependant when you die;
• Enhanced annuities are paid to people who may have a lower life expectancy as a result of their health to lifestyle factors.

Choose (PDF, 594KB) how to take your income. You could be paid a set amount every month for the rest of your life, so you’ll normally know how much you’re getting and when. You can take up to 25% of your retirement savings tax free and use the rest to buy a guaranteed income.

FLEXIBLE ACCESS DRAWDOWN

You can take up to 25% of your retirement savings as a tax-free lump sum and leave the rest invested. You can then use the rest to take regular taxable income and/or ad-hoc withdrawals. Just remember - with this option any withdrawals come directly out of your retirement savings. If you take out too much or the investments fall in value, you could run out of money in retirement. Remember, your investments could fall in value meaning that the income you would be able to take would also reduce.

TAKE IT AS CASH

Think about how much you want to take as a cash lump sum and what you want to do with it. This could be useful ‘rainy day’ money. You can usually take up to 25% of the amount tax-free, with the rest taxable as income. Taking cash lump sums will reduce the income you have in retirement.

• If you’re unsure what action to take – seek help. There’s information on this site and we’ve provided links to other sites to help you. If you’re still unsure and need advice, your employer or Scottish Widows can’t provide advice, but you can speak to a Financial Adviser. You will be charged for any advice. If you don’t have an adviser, you can find one at unbiased.co.uk or vouchedfor.co.uk

It’s time to take your benefits. You need to:

• If you haven't done so already, move your investments in to low risk funds to help avoid a late fall in value.
• Take your pension benefits.
• Put in a claim for your state pension – if you’ve reached state pension age.
• If you have chosen drawdown you should regularly review this decision to ensure this continues to meet your needs.
• Enjoy your retirement!