Pension 10 – Pre-retirement Checklist

I should credit any number of sources for a good chunk of this, but they all share so much content that it’s hard to know who wrote what.  If you feel you’re a significant  source of original content, feel free to reply.  Prudential is just one website that I looked at for this, plus Prudential’s “Pre-retirement_Checklist.pdf” on the Unbiased website. 

I’ve edited a lot and added some points of my own.  So here’s my version of this, and thanks to those who have built some of this over the years.


10 years before you plan to retire

Hopefully you’ve been building up pensions for the last 20 to 30 years.  Now it might be too late to massively change your pension value, but you can certainly make the most of the 10 years leading up to retirement, and make a sensible choice of when to retire.

Think about:

  • At what age do you want to retire. What is the latest you would wait before retiring.   Do you have DB pensions with default start dates?  When does your state pension start?
  • Pay off any debts before you retire, such as your mortgage or car loans. If you use the tax free pension cash to do that, will you have enough left for a pension?
  • Pay for high value costs such as car changes or house repairs.
  • Check whether you have a “lifestyle” setting for any DC pension or SIPP. Is that what you want?  They often start to reduce growth around 10 years before retirement, in anticipation of a fixed date when you buy an annuity and would be upset if your fund crashed/dipped at  that time.   (I will remain invested in funds covering whichever parts of the world seem to offer the best growth.)


  • Do a budget to work out the income in retirement (a) that you need and (b) that you’d like. Many consider that having 2/3rds of your pre-retirement net income is about right for the second, but better to work it out from a budget.


  • Estimate how much you’ll likely have as pension income and in your pension funds. Include savings, investments and other assets that could consider to be your retirement income.
  • Will you work part time?
  • As a rough guide, many people assume that funds grow at “inflation plus 3%”, so your funds could produce a 3% income that rises with inflation. Whatever you choose for your model, try slightly higher and low to see how sensitive it is.
  • Consider how much pension you want as secure income (state pension, defined benefit, indexed annuity) and how much as drawdown/ISA.
  • Be clear whether any frozen pensions are being indexed at CPI or RPI from now until you start to draw it. Consider asking for a transfer value for a frozen DB scheme.  Also ask at what age you can draw the pension without reduction – it might have changed.
  • Calculate roughly whether you are likely to exceed the Lifetime Allowance (LTA). If yes, consider that further AVCs and payments into SIPPs might not be tax efficient.  Instead you could use an ISA or your spouse’s SIPP.
  • Check how much state pension you and any partner will get. Check your NI contributions will be sufficient, and decide whether you want to pay extra for missing years.  Remember that if you retire early you will miss some years of contribution.


Age 54 & 55

  • If you have a SIPP or DC Pension, and you plan to use Drawdown, then you will probably start moving funds to Drawdown at age 55, and getting 25% tax free to move into an ISA for your retirement. Get the Drawdown account set up in time.
  • Be clear where you will put the 25% tax-free sums. If they don’t fit in ISAs, maybe spread the moves to drawdown over several years.
  • Understand what your work pension scheme will let you do while still contributing.
  • Trace any lost pensions through the Pension Tracing Service.
  • For every pension, get a statement showing when it can be taken without reduction (might be sooner than you think), actuarial reduction for starting it early, automatic lump sum, commutation rate for additional lump sum, and any extra benefits such as bridging the gap to the start of state pension, etc..
  • Decide roughly when you will first draw a taxable pension as opposed to the 25% tax free. The first draw of taxable pension has huge implications.


Three to five years before you plan to retire

Check you are on track and flesh-out your plan:

  • Decide the age you’re likely to retire.
  • Get an understanding of the latest tax and contribution rules. Use them in your models.
  • Consider what you will do with your time. Make a weekly diary and a bucket list of holidays/activities:  travel, hobbies, education, sports, volunteering, working, and more.  (Then consider whether you could be doing the best activities now rather than waiting!)
  • Budget your living expenses in retirement. Make a budget for just after retirement and another for age 80 when spend is much less.  Consider that instead of commuting, you will be travelling to a new mix of activities – maybe that more cost, maybe less.  Spending more time at home might increase utility bills.
  • At some age will you want to move to a retirement property, sheltered, or one where a car is not required? What house moves between now and then make sense.
  • How will you support your dependants once you’ve retired.


  • Plan your finances and model your annual costs (see my model example). Try models where you adjust:
  • An emergency accessible fund, to help with any unexpected costs like car or home repairs. (See also notes on structuring SIPP/Drawdown/ISA and cash buffer.)
  • Reserving money for long-term care for you, your spouse, or other dependants.
  • Consider how actively you will manage your retirement finances. At some point (mid 70s?) this might not be feasible, so would you switch to annuities or other simple arrangement plus a care-home reserve at that point, and is it reasonable to assume the same income from your investments at that time?
  • What difference will it make to your pension to work for 2 or 3 more years: more income, more pension contributions, less pension withdrawal.
  • Consider phasing your retirement, and continuing to work part-time for your current or a new employer. Does your current employer need a nudge to consider part-time?  If you choose to switch to part-time, are you happy to give up some of your redundancy package?
  • Consider boosting your pension by increasing your contributions and/or adding lump sum payments (take advantage of any unused pension tax allowance from earlier years). But also avoid exceeding the LTA.
  • Consider whether you should boost your spouse’s pension rather than yours. (See my maths on the tax impact of contributing and withdrawing, and when you get it back.)
  • Are your investments placed suitably considering what you need them to do? Cash vs bonds vs equities?  Volatile vs stable?  Which sectors?
  • Many people get some tax-free cash. Do you have short term plans to spend it, or is it a long term source of pension income?
  • Discuss your options with a financial adviser, if you have one. Discuss with your spouse.  You could also talk to family and friends.  You are about to make a serious financial decision.
  • If you’re 50 or over you can get free impartial guidance from Pension Wise. This guidance can be on the internet, over the phone or face-to-face.
  • Write a will or review your existing will. Plan what will happen to your pension and estate if you die.  (Look at my IHT maths).  If like me you had advice many years ago but then updated by yourself, consider getting professional advice at this stage and/or around state pension age.  Do you need to outline to your executors how to invest and whether to employ legal advice (e.g. for a particular type of trust).


Six to twelve months to go to retirement and at retirement

Probably you already have a drawdown account and you have some 25% tax free cash in ISAs.

Last chance to get everything in place (and change timing if necessary).


  • Discuss your options with an adviser, spouse, family and friends – and those who have already retired.
  • Ask your pension providers about the ways you can access your pension with them or others.
  • Get up-to-date pension statements for all your pensions.
  • With assistance from an adviser if you want, work out the best way and time to take your pensions. Shop around.


  • Tell your pension providers that you’re planning to retire, so that they can send you the information you need in plenty of time.
  • While you’re doing this, you might as well update your pension beneficiary information.
  • Set a date for a pre-retirement meeting with your employer.
  • Let HMRC know you’re retiring because your change of status will affect your tax code.
  • Update your budgets, especially the one for just after you retire.
  • Look into any entitlements and benefits from the government.
  • If you plan to get an annuity, shop around and consider getting an enhanced annuity if you or your spouse have health issues. Look at single life and joint life in both your and your spouse’s names.
  • Do you need to split, consolidate or move your pension?


Approaching State Pension Age

I’m assuming that you are either retired or partially retired by this time.

  • You should get a letter about four months before you reach State Pension Age, telling you how to claim your State Pension. If you haven’t received this by three months before, chase it.
  • You can use Pension Wise for impartial guidance.
  • Remember that some extra benefits might start and might need claiming. Don’t forget the bus pass.
  • There are options to delay taking state pension. This might or might not be worthwhile.
  • The extra income from state pension might mean you should substantially change your withdrawals from other pensions.
  • Hopefully your finances still look OK, and you can do a big replanning.
  • Look at your will again.


Age 75 (or 70’s generally)

  • Depending on tax rules, 75 can be a critical age for inheritance.
  • Is there anything that might yet affect your LTA? At age 75 it will get tidied up but not necessarily to your liking.
  • Will you downsize your house? Will you have monthly leasehold and communal fees etc.?  Can you easily get from there to shops, cafes, parks, GP, station, friends, hospital, etc.
  • Consider the latest rules on care home fees.
  • Are you OK with the balance of funds in pension and ISA, considering IHT.
  • Are you still able to manage the investments, and keep up with tax changes? Consider making your pension income simpler (e.g. buy an annuity, switch to simpler funds, or get someone to manage your income).  If you buy an annuity or some other high-yield product, does that free up the remainder of your investments?  Beware of  removing too much flexibility – would a trust or simply account access enable someone to manage finances for you?
  • Consider making Lasting Power of Attorney for finances and for health care.
  • Update your will, considering how your finances are going to be structured.
  • Will you make gifts?