The final year before retirement is when a lifetime of saving turns into a set of real decisions — some of which, once made, cannot be unmade. Sorted early, they set up a comfortable and confident retirement. Left to the last minute, they get rushed. If you plan to finish work within the next twelve months, here are the five things worth putting in order now.
1. Track down every pension you own
Most people arrive at retirement with several pots from old jobs, and many have at least one they have lost track of. Request an up-to-date statement for every pension you can find, and use the government’s free Pension Tracing Service for any you cannot, we can assist you with your search if required. While you are at it, check each one for valuable guarantees — some older policies contain guaranteed annuity rates or protected tax-free cash that are worth knowing about before you make any decisions.
2. Get your State Pension forecast
Your State Pension is the foundation everything else builds on. Get a free forecast at gov.uk to confirm what you will receive and from what date — and check your National Insurance record for gaps. In some cases, filling missing years with voluntary contributions can increase your State Pension for life, but there are deadlines and it is not right for everyone, so investigate early.
3. Work out the income you will actually need
Before choosing how to take your pensions, know what they need to provide. Build a realistic picture of your essential spending, your lifestyle spending, and any one-off plans for the early years — travel, home improvements, helping family. Retirement spending is rarely flat: many people spend more in the active early years, less in the middle, and more again later if care is needed. Your income plan should reflect that shape, not a single flat number.
4. Decide how to turn your pots into income
This is the big one. Broadly, your options include a guaranteed income for life through an annuity — where health conditions could enhance your rate — flexible withdrawals through flexi-access drawdown, taking tax-free cash of up to 25% of your fund (within limits), or a combination of these. Each route has different implications for security, flexibility, tax and what happens to your money when you die — and some decisions, such as buying an annuity, are permanent. Free impartial guidance is available from MoneyHelper, including Pension Wise appointments for over-50s.
5. Don’t ignore tax — it doesn’t retire when you do
How and when you draw your pensions affects how much tax you pay, sometimes dramatically. Taking too much in one tax year can push income into a higher band; the order in which you use pensions, ISAs and other savings matters; and your estate planning may need updating too, particularly with pensions due to come within inheritance tax from April 2027. A little sequencing can preserve a lot of income.
Sorted in the right order, none of this is overwhelming
Our retirement planning service walks you through all five steps — reviewing your pensions, modelling your income, and helping you choose the right blend of security and flexibility for your circumstances. The first conversation is free, and there is no obligation whatsoever.
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This article is for general information only and does not constitute advice. The value of investments can go down as well as up and is not guaranteed. Tax treatment depends on your individual circumstances and may change; rules described reflect the position and announced plans at the time of writing. An annuity cannot normally be changed or cancelled once set up. Free impartial guidance is available from MoneyHelper, including Pension Wise for over-50s. Our advised services are provided on a fully advised basis by FCA-regulated advisers. Retirement Professionals Ltd is an appointed representative of pi financial ltd, authorised and regulated by the Financial Conduct Authority. FCA number 622943.