It’s never too early to think about retirement planning!

For most of your working life, it wasn’t exactly a pressing concern. You might have pondered it for a few minutes as you skimmed your company’s annual pension statement, but retirement was more like a vague, distant concept rather than something that would actually happen one day.

Then, suddenly, you hit your late 50s or early 60s and you realise, almost without being aware of it, that you’ve begun paying closer attention to those commercials about financial stuff and having retirement conversations with colleagues.

Now, retirement looms with terrifying urgency. Do you have enough savings? Is your money invested too aggressively — or not aggressively enough? Do you need to worry about nursing care? Do you have a will?

This abrupt awakening/panic attack often hits five years or so before retirement — and that can be a good thing because those years can be critical. You can make plans now that will substantially improve your life in retirement.

The five years before and after retirement might be called ‘the fragile decade,’ because planning is critical for a happy and secure retirement. Without a plan, new retirees often feel aimless and adrift.

That doesn’t mean you have to make every retirement decision immediately –many of your retirement choices can be spread over a few years to deal with at a comfortable pace and sensible reflection.

So, what are the key things to concentrate on each year? Here is our suggested five-year countdown to retirement.

Five years to go

Your first step is, admittedly, a daunting one. But the rest of your retirement planning depends on it.

Before anything else, you need to see where you stand financially. How much have you saved, and will that money, plus your State pension and any other pension income, generate enough cash to cover your expenses in retirement? In short you need a Lifetime Cashflow Forecast to help you see what your future holds and whether you will be able to afford to live the life you want in your retirement.

You may already have a bad feeling about what this might show you. But don’t worry – this is the moment to confront the truth, knowing that there’s still time to make changes to your investments to generate bigger returns, cut back your current spending to find more money for savings or (worst case) rethink your retirement expectations.

A good financial planner will help you to look at this objectively and work with you, to design the best personal retirement plan possible with your resources.

It might be sensible for you to maximise tax efficient investment vehicles like pensions and ISAs in order to have as much tax free income in retirement as possible.

As the saying goes “knowledge is power” and without knowing exactly where you are 5 years out, could mean that your dearly held retirement dreams come to nothing.

Four years to go

Give some thought to where and how you might live in retirement. Is your current house too big? If you are planning to travel is it suitable for locking up and leaving? Might you rent it out while you are away? Would you be interested in letting a room or doing AirBnB?

Do you see yourself downsizing or moving nearer to your children or grandchildren? How long will it take to clear the clutter from the attic? Will you need a home that is more suitable for you as you get older – less stairs, simple conversion if you become infirm?

Perhaps an apartment in a senior community is something you would like, or if this sounds like your idea of hell, a cottage near the beach? What about a holiday home in the sun?

Do you have elderly parents to consider? What about the purchase of a nicer property with a granny annex to accommodate everyone?

It’s a good idea to have family conversations about these issues so you have plenty of time to think things through and do some research on how you might like to live in this next chapter of your life.

The costs of nursing care and the problems with our Social Care system are highlighted every day – it’s a good idea to think about how you are going to deal with this for your parents and yourselves before health issues impose restrictions and generate panic responses.

While you are thinking of health and mortality, have you made your Will? If you don’t have one yet, get it done this year. It makes things much easier for your heirs when you die. If you already have a will but haven’t looked at it for a few years, check that it reflects your current wishes and is up to date.

You should also consider Lasting Powers of Attorney. These give authority to people you trust to handle your financial and health affairs should you be unable to do so in the future.

Don’t forget to keep tabs on your Financial Plan along the way to make sure you are still on target and making the most of your resources.

Three years to go

Put aside some time this year to contemplate what retirement will actually mean for you. You may want to travel and maybe you imagine going somewhere warm for the winter months. But what about your day-to-day existence? What will you do with yourself? How will you spend your time (and ultimately your money?)

People often fail to consider how they will feel once they are no longer part of the work force. While work can be stressful, it can also be rewarding to feel important, purposeful, social and accomplished.

Think about taking classes, joining a social group or exploring hobbies you enjoy while still working. This can help keep you engaged in activity even once you’re retired. U3A (The University of the 3rd Age) is a great place to start to find new passions and friends.

Focus on what is important to you! For example: if you only had three years to live, what would be your top three priorities?

Or, let’s say a doctor said you had three hours to live. What would be your regrets? What do you wish you’d done better or more of with your time?

Retirement is most successful when the retiree has something to retire to – a fulfilling purpose in life. Playing more golf or tennis is great to start but soon becomes boring and mundane.

Think also about your relationship with your life partner – how might that change? Having twice the husband on half the money is not an exciting prospect for many wives! Communication is key here – how will you each feel in this new paradigm – joyful and enthusiastic to do more things together, or resentful that you are cramping each other’s style?

And don’t forget to check that Financial Plan – do you need to do any tweaking this year?

Two years to go

Some potentially big tax-saving opportunities await you early in retirement, and this is when you lay the groundwork for them. It’s possible your taxable income will drop by a lot in the calendar year after you stop working. If you don’t start taking your State pension and defer withdrawals from your other pensions until later years, you may find yourself in the lowest tax bracket for some time.

Proper organisation of your assets to produce tax efficient income when you have stopped working may take a few years to accomplish.

For example: if you’re going to generate cash by selling investments that have appreciated a lot over the years, see if you can make disposals over different tax years, so that you can maximise your Capital Gains Allowances.

It may be beneficial to transfer some assets into the name of your spouse or civil partner to spread out the income and gain for tax purposes.

Before this year is out, you should rerun all the numbers in your Financial Plan to find out what your expected retirement income looks like now.

A great thing to do when you are two years from retirement is to ‘practice being retired!’ Try to live off the annual cash flow you anticipate during retirement, before you retire. If this it too uncomfortable, you may decide to work for a little longer to give you a bigger savings cushion to work with later.

The final year!

Not long to go now!  Have another look at the financials, are you happy that things are on target or are you still worried about how you will manage when you stop work?

Are you still happy to take the same amount of investment risk in retirement than you are now? Do you know what return you need on your money to be certain of never running out and being able to live the life you want? These issues need to be addressed and if you haven’t done so before, you should engage a specialist Financial Planner to help you – any wrong assumptions or calculations at this stage could be critical and may mean a return to working in a few year’s time.

Take a good look at your house this year, too. Whether you’re thinking about selling it to downsize or determined to stay in it forever, it may need some updating. Better to pay for it now while you’re still earning a salary.

Think about private health care – does your current employer offer a health policy? Do you want this to continue into retirement? Can you afford to pay for this yourself? The NHS is always there, so how important is this to you? Can you take advantage of a pre-retirement health check?


  • Are you sure you have something to retire to?
  • What will you do with your time? Will you be bored? Will you enjoy your post work experiences? How are your energy levels? How important is your social network at work? Do you have a need for relevance or competition? What is your level of self motivation? How is your health?

Remember that retirement is an artificial finish line and you may not yet be ready to cross it!