• Your retirement journey

    Retirement is the time to relax and enjoy doing the things you love – it shouldn’t be the time for money worries.

    Follow our retirement journey to learn how, together with your adviser, you can aim to make your money work harder. Take the journey.

    Pre-retirement (55-64)

    This could be the ideal time to pay off any debts, and work on a financial plan that gives you an adequate income once you decide to give up work.

    People are now working for longer.

    48%would still like to be in work between 65 and 70.

    39%would like to work part-time or flexible hours in early retirement.*

    While it’s likely you’ll be working in your 60s, you may also still need to pay for:
    • Mortgage • Loans • Travel/commute costs • Children (university or first home)

    * Source: YouGov survey of 2,000 over-50s.

    Planning for the future

    You should have an idea of what a comfortable retirement looks like for you – and how much money you may need to maintain that lifestyle for your whole life.

    To tackle these questions, work out your annual spending on:

    Things you need

    • Housing and home upkeep
    • Healthcare
    • Food and sundries
    • Utilities
    • Transport

    Things you want

    • Holidays
    • Grooming and pampering
    • Dining out
    • Hobbies
    • Transport

    Accessing your pension

    From age 55, you can access the cash tied up in any personal pension, and also a workplace pension if the scheme allows from that age

    You can usually take up to 25% from your pension as a tax-free lump sum. But before you splash out, consider:

    • Will you have enough money left over to provide an adequate income for the rest of your life, covering the things you need – and the things you want?
    • Should you consider tackling any debt you may have first?
    • How will the rest of your pension be taxed?

    Meeting your needs

    Here are some of the most common financial wishes in retirement:

    • Guaranteed income for things you need
    • Growing your investments for things you want later
    • Flexibility to access your money when you need it
    • Ability to leave money to family

    There are different ways to manage your pension, including:

    • Taking it all as a lump sum
    • Buying an annuity for a guaranteed lifetime income
    • Investing in a drawdown product for a flexible income
    • Investing in a retirement income product with guarantees
    • Taking cash sums on an ad hoc basis

    You should talk through the different options with your adviser. You can also find more information on our website or on pensionwise.gov.uk

    Each of these options has tax implications which can be significant.

    Retirement risks

    When planning for retirement, it’s important to consider these key risks.


    Life expectancy is on the rise, and you may live longer than you expect. Your money needs to last too.


    Your spending habits and expenses will change over time. You need the flexibility to take money from your investments for rainy days.


    If you invest during retirement, the value may rise and fall. Volatile markets can reduce the value of your pension and income.


    If the value of your investments doesn’t keep pace with inflation, your purchase power will fall over time.

    Active years (age 65-74)

    These years are a time of big change.

    • You’ll reach state pension age
    • You may stop working
    • You may have fewer debts
    • You may be spending more on leisure and hobbies

    You may be planning some globe-trotting, or starting up a new business.

    1 in 10 over-55s would consider taking money from their pension to start a small business or go into consultancy.

    Funding the finer things

    This could be the ideal time to enjoy the rewards you’ve earned over your working life.

    That may mean taking money from your pension for holidays, evenings out or family treats. Or, if you’re starting a business, you may need money to get you started.

    Guarding against inflation

    UK life expectancy has increased by a decade since the 1980s, and living beyond 100 will soon be the norm.*

    Future-proofing your savings is a must. That means:

    • Making sure you have enough saved to last
    • Guarding against inflation

    While wages tend to keep up with the rate of inflation, the same isn’t always true of retirement savings.

    One way you can aim to protect your purchase power is to invest in ways that help your money to grow over time.

    *Source: Office for National Statistics

    Growing your money for the future

    Here are a few options to discuss with your adviser that aim to help your money grow, or bring in additional income.


    • Regular rental income
    • Rent can reflect current market rates (and inflation)


    • Free up capital locked in your home
    • Reduce the bills

    Start a business

    • Work for yourself
    • Bring in an income

    Other investments

    • Invest your money into a stocks & shares ISA
    • Invest in funds, bonds or similar for potential income from investment returns*.

    *The value of investments and income can go down as well as up and is not guaranteed; you could get back less than invested. The value of any tax benefits are subject to change and will depend on your personal circumstances.

    Don’t rush into it – plan.

    Margaret Mountford, former adviser to Lord Sugar, offers tips for entrepreneurial over-55s.

    Winding down (age 75-84)

    Research has found that failing health is one of the biggest factors affecting wellbeing for those in their 70s and 80s, and this has important financial implications.

    • You may consider moving into residential care, or receiving in-home nursing care
    • You may spend more time at home, which could increase utility bills

    Counting the cost of care

    While care services may not be needed for everyone, it’s important to know the costs.

    Residential care homes

    According to PayingForCare.org, a not-for-profit care advice service, care homes cost an average of:

    In-home support

    If you want to stay in your own home and get support from a care worker, you can expect to pay:

    These costs vary depending on where you live in the UK.

    Care after 2020

    From April 2020, the government is putting a £72,000 cap on elderly care costs.

    People with assets over £118,000 will need to cover care home costs until they reach the £72,000 cap, or their assets fall below £118,000.

    However, this cap doesn’t cover food and heating (‘hotel and accommodation’ costs), which will be set at £12,000 per year.

    Factoring these costs into your retirement plan may help ease the stress of declining health in old age.


    Once you reach your mid-80s, it’s natural to start thinking about how you’d like to pass your money on to loved ones.

    An adviser can recommend smart ways to minimise the impact of inheritance tax. If you haven’t done so already, you’ll need to speak to a solicitor to record your wishes in a will, which ensures:

    • You decide who will inherit your estate, and how it will be divided
    • You decide who will manage the process of winding up your estate (the ‘executor’)

    Inheritance tax basics

    40%rate of inheritance tax

    Your estate is made up of your property, money, investments and possessions.

    Currently inheritance tax is charged if your estate is worth more than £325,000. Anything above this threshold is taxed at 40%*

    For couples who are married (or in a civil partnership), if one partner’s estate is below the threshold of £325,000, they can transfer the remaining threshold to their spouse when they die. This means the surviving partner’s estate can be worth up to £650,000 before it incurs any inheritance tax.

    Additionally where a main residence forms part of the Estate new rules will be introduced from 6th April 2017 giving an additional property allowance of £100,000 per person. This allowance will increase over the following 3 years to £175,000 giving a combined allowance of £500,000 per person by 2020.

    *Tax rules may change in future. These figures are correct for the 2016/17 tax year.

    Reducing inheritance tax liability

    Here are some options to discuss with your adviser about minimising inheritance tax

    1. 1. Leave money to charity
    2. 2. Leave assets to a spouse or civil partner
    3. 3. Transfer your pension
    4. 4. Put assets into a trust
    5. 5. Give gifts

    1. Leave money to charity

    Any money left to charity or the State is free from inheritance tax. If you leave more than 10% of your estate, your inheritance tax rate drops to 36%: a 10% reduction.

    Did you know?
    Two out of three guide dogs and six out of 10 life boat launches are paid for by gifts in wills, according to children’s crisis charity Unicef.

    A poll conducted by the British Heart Foundation in April 2015 also found that 43% of the UK public plan to leave money to charity in their wills – and 48% agree that donating gives them a ‘real feeling of wellbeing’.

    Sources: Unicef and The British Heart Foundation

    2. Leave assets to a spouse or civil partner

    ‘Spouse or civil partner exemption’ means no inheritance tax needs to be paid if the deceased leaves everything to their spouse as long as they live permanently in the UK.

    Plus, the introduction of the family home allowance from 6 April 2017 means that the total tax-free allowance for a surviving spouse will be up to £1m in 2020, as the inheritance tax threshold increases to £500,000 per person.

    Anything over this threshold will be charged at the usual 40% rate.

    3. Transfer your pension

    With a flexi-access drawdown product, you can transfer your pension to a loved one tax-free in some circumstances.

    If you die before 75, you can pass on your fund as a tax-free lump sum or retirement income.

    If you die at 75 years or older:

    • Before April 2016, your beneficiary will pay 45% tax if they take it as a single lump sum, or income tax if they take it as a retirement income.
    • After April 2016, your beneficiary will pay income tax, regardless of how they take the sum.

    4. Put assets into a trust

    A trust is a mechanism for holding your assets and transferring them to trustees (for example your children) under certain terms.

    Your pension is automatically exempt from inheritance tax, irrespective of how much you have saved, as it has its own trust.

    Putting assets into a trust aims to reduce your tax liability, but you should discuss this with an adviser, as the process is complex.

    5. Give gifts

    Anything that has value, whether money, property or possessions, can be given away to children before you die in small sums of cash, tax-free if within the Inheritance Tax Gift Allowance (up to £3,000 per person for 2016/17).

    Larger sums are tax-free, as long as you live for 7 years after giving the gift. If you die within 7 years of giving the gift – and you gave away gifts worth over £325,000 in that time – then the recipient will have to pay inheritance tax.

  • Please bear in mind

    It's important to think carefully about your financial plan for retirement. An adviser can help you to understand your options and recommend the best path for you.

    The value of investments can fall as well as rise and is not guaranteed - you could get back less than you invest.

    Tax treatments can change in the future and depend on your individual circumstances.