1. Approaching retirement
2. Take stock of your money
Couple on laptop

Take stock of your money

Getting to grips with what your income will look like is an important part of planning for your retirement. 

Understanding how much you have in your pension pots and how much retirement income you might need can help you prepare for when you choose to stop working.

1. Calculate your retirement income

This could be made up of:

State Pension

Savings in your pension pots

Other income e.g. benefits, savings, property

= Your total retirement income

It's a good idea to check you're on track to receive the full State Pension, and when you're eligible to start accessing it. You can do this on the gov.uk website. At the moment, the new State Pension is £11,502.40. Then it's time to add up your workplace and personal pensions. If you've lost any pots over the years, the government offer a free pension tracing service to help you track them down. If you'll have any other income in retirement, like savings or income from property, add that too. Don't forget that you might pay tax on your retirement income - read our article What tax will I pay on my pension pot for more details.

2. Calculate your retirement expenses

  • The Retirement Living Standards' guidance for a moderate income in retirement is £31,300 if you're living outside of London. This doesn't include housing expenses like rent or mortgage
  • Do you want to holiday in the UK or spend a few weeks travelling the world? What kind of hobbies will you pick up, do you love eating out or will you dig out the cookbooks? 

  • If you're concerned that you'll still be repaying debt in retirement, and your income won't cover the repayments, it's important to start thinking about a repayment plan sooner rather than later
  • Whether it's a loan, credit card or mortgage, they can come with high interest rates that build up quickly over time. Our Manage your debt page has lots of useful information and links to free advice helplines

  • Depending on when you choose to stop working, you could enjoy a retirement of 30+ years. It will look different over time, and you'll probably need a higher income earlier in your retirement than in your later years. Although it's important to consider your care costs in later life

  • You may still have some income from working but haven't reached State Pension age yet
  • Expenses might still be high during this period and not all of your retirement income may be available to you
  • This may be the period you start on your new adventures which may need increased spending

  • These may be your more active years where you want to explore the world or help your family out financially
  • You might want to move closer to family or downsize. At this time you may need to access ‘chunks’ of money 

  • These may be the years when you start to wind down and you may need more help in later life like modifications to your home or care support
  • You might also want to think about any inheritances you want to set aside

3. Compare your income to your expenses

Now that you know what your retirement income will be, you need to see if this will cover the retirement lifestyle you're planning. Our interactive budget planner can help with that. 

Is there a shortfall?

  • Check whether you're eligible for any additional support like Pension Credit - visit the Help for Households website
  • Consider deferring your State Pension or reducing your working hours to part-time
  • Adjust your budget - play around with the budget planner and see if there are places you can save some money
  • Visit our Financial planning hub for tips on managing your budget. We also have lots of support on My Wellbeing to help with the pressure of financial stress

Next steps