Tips and tools for retirement planning

This article contains practical tips and tools to help you create a budget, plan for taxes, and ensure your financial success.

Retirement planning tips

State pension age

The state pension age is changing. This could affect how early you are able to claim your state pension and, in some cases, will mean that you may need to work for longer.

With this in mind, financial planning for retirement is essential to get a measure of your income, expenditure, state pension and personal pension funds, as well as considering any pension schemes provided by your current or previous employer(s).

Your employers pension scheme and automatic pension enrolment

Every UK employer that has more than one employee is responsible for automatically enrolling all its eligible employees into a workplace pension. This can be a great opportunity to boost your retirement savings, benefitting from your employer and the Government also putting in money.

Where automatic enrolment into a pension is available:

Your employer is required by law to contribute at least 3% of your earnings.

The minimum total contribution you and your employer will make is 8% (as of April 2019).

Whilst you can choose to opt out of the auto-enrolment scheme, it may not be wise to do so as you will lose the benefit not only of your own contributions, but also those of your employer and the Government.

Your personal pension

  • Your personal pension pot is currently accessible when you reach the age of 55.

    However, the Government has announced that the minimum age at which individuals can access their personal pensions will increase from 55 to 57 in 2028.

  • You’ll receive an annual pension statement from your personal pension provider. It’s essential to check this on a regular basis, as your pension statement is a useful indicator of the value of your pension pot, your specific age of retirement and what you might expect to receive at that age.

    You should review your investment choices regularly and make sure that they continue to match your retirement aims.

  • Accessing pension savings at the minimum age may not be the best option. Most people will live longer than they expect and their pension savings need to cover their requirements for the rest of their life. You may prefer to wait until a later date, which also gives your pot a chance to grow.

    You can check your estimated life expectancy using the Office for National Statistics interactive tool.

You can also use the Retirement Living Standards information produced by the Pensions and Lifetime Savings Association to help you to picture what kind of lifestyle you could have in retirement.

Retirement planning tools

  • Pension calculator

    You can use this calculator to review your assets, savings and other sources of income that will fund your retirement (for example, property).

    Use our pension calculator to estimate the future value of your personal pension savings.

  • Retirement budget planner

    You can use our retirement budget planner to create your ideal retirement budget. Our handy budget planner will help you work out how much money you may need each year to give you the kind of retirement you have always looked forward to. Be sure to include all income that will carry on during retirement and account for any debts that you have. Make sure that you prepare for the unexpected, such as ill-health and changes to your income.

  • Pension lump sum tax calculator

    When you access your pension savings there will usually be tax implications. These will vary depending on which retirement option(s) you choose. If you are thinking of taking all your pension savings as a cash lump sum, you can use our pension lump sum tax calculator to help you understand what tax you may pay if you choose this option to access your Phoenix Life pension policy.

Retirement options

  • Flexibly accessing your pension

    Often referred to as ‘pension drawdown’ you can take money from your pension flexibly as an income that you can start, stop or change to suit your circumstances. Any money that you don't take now, you can leave invested so it has the potential to grow. Money in a pension plan is usually invested so its value can fall as well as rise and you could get back less than was paid in.

  • Guaranteed income

    An annuity is usually designed to provide a guaranteed income for life, but it can be set up to provide an income for a specified number of years. There are options regarding the frequency that income from an annuity can be paid, for example; monthly, quarterly or annually. It is also possible to arrange for the payments to be for either a fixed amount or increasing over time, usually year by year. The annuity can also continue to be paid to a spouse, civil partner or dependant if you die before they do.

Making decisions about your finances can feel daunting, but preparation will allow you to confidently step into an enjoyable retirement.

Source: Money and Pensions Service, accessed 6th January 2021.