Retirement Living > Preparing for Retirement Checklist: The 7 Essential Steps You Need to Take

Preparing for Retirement Checklist: The 7 Essential Steps You Need to Take

Preparing for retirement checklist
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As you approach retirement, there are numerous things to consider. You’re definitely better off thinking about these things early. Reviewing your finances, working out your future income and deciding the best time to retire is what’ll allow you to live the post-work lifestyle you’re after.

While some completely retire at 65 or earlier, others prefer to gradually ease their way into retirement. Whatever your preference, you can use our handy preparing for retirement checklist to ease you into later life.

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The 7 Essential Steps to Prepare for Retirement:

  1. Decide when you’d like to retire (and know your options)
  2. Consider different income options
  3. Work out your probable retirement income
  4. Figure out how much money you’ll have in retirement
  5. Will you need to provide for others?
  6. Get financial advice or independent guidance
  7. Emotionally prepare for retirement

1. Decide when you’d like to retire (and know your options)

Some people can choose the age they retire at, while others will keep working until their pensions kick in to provide the financial security that makes retirement possible. However, if you’re still a while away from retirement, then it makes sense to think about when you’d like to retire, especially if you’re set on doing so soon.

A pension calculator is a handy tool that helps you work out how much you’ll need to save every month to reach your retirement goal. All you need to do is enter a few details - such as how much your current pension pot is worth, how much you’re saving per month, when you’re hoping to retire and how much income you might need throughout your retirement years. You’ll then be able to see if you’re on track to achieve your goal or whether you need to ramp up your saving efforts.

Decide when you'd like to retire

2. Consider different income options

Depending on the kinds of pensions and assets you have, you might need to think about what money you’ll have available.

Your home

Whether you own your home or rent, you’ll need to consider where you’ll want to live when you retire. If you do own it, then this property could end up playing a significant role in your future.

If you’re after a lifestyle change - and may move as a result - then downsizing can end up being a really smart option. With more independent living options, many retirees are choosing to sell their homes and move to a desirable retirement village or retirement home in the countryside, or a similarly appealing urban setting.

Defined benefit pensions

A defined benefit pension will usually begin paying you a guaranteed income from your normal retirement age under the scheme. Double-check with your scheme first, but this will usually be aged 60 to 65.

The amount you get will depend on your salary and how long you worked at that company.

A lump sum might be paid alongside your pension, or you may have to give up a portion of your income to take this lump sum.

Defined contribution pensions

Regardless of how young you are, your first priority when planning for retirement should always be to set up a pension that has enough time to grow into a healthy and reliable source of income. If you’re an employee, then you should have been automatically enrolled into your workplace pension when aged 22 or over and earning more than £10,000 a year with your employer.

When self-employed, you’ll need to make your own pension arrangements.

You can usually start taking from a defined contribution pension aged 55.

The money in this pension can either be used to provide you with a steady income or a handful of larger sums when retiring. Different options can provide different levels of income.

State pension

The state pension age is the earliest you can claim your state pension. This age depends on when you were born. For people who will soon be reaching the state pension age, it’s 66 years old. Those born after April 1960 will need to be 67 (and eventually 68) to begin claiming it.

The amount you’ll receive depends on your National Insurance record. You can check your state pension forecast to see how much you could get and when.

Currently, the full new state pension is £185.15 per week. The only way to increase this is by deferring when you claim your state pension or if you have over a certain amount of additional pension.

Other sources of income

Aside from pensions and assets like your home, here are a few other sources of income that may be attainable to you. Unlike pensions, this income isn’t guaranteed and will likely vary over time:

  • Part-time employment

  • Savings and investments

  • Selling any other possessions you no longer need

What will your main sources of income be?

3. Work out your probable retirement income

You should now be able to work out your potential retirement income. Your income in later life could come from a state pension or workplace pension, along with any money gained from selling assets and any other sources of income you might have.

Here are the things you should do to work out how much you’re likely to have in retirement. It makes sense to do this around two years before you’re due to retire:

1. Get a state pension statement - If you haven’t recently received one of these then it’d be a good idea to get one. This will provide you with an estimate of how much state pension you can expect to receive, based on your National Insurance contributions. You can check this forecast through GOV.UK

2. Find out how much you might get from a defined benefit pension - To get a retirement quote, speak to your pension provider

3. Find out how much you have in your defined contribution pension pot - You should be sent an annual statement that shows how much is in your pot

4. Add up the savings and investments that could be used for your retirement - A pension is one of the most reliable ways to save for your retirement. Other savings and investments can provide a much-needed boost

5. Trace any lost pensions - If you’ve lost track of any old pensions then the government runs a free service to trace them

4. Figure out how much money you’ll have in retirement

There’s a good chance you’ll have less money to live on in retirement, meaning you’ll need to adapt to a different spending pattern.

To prepare for these changes and help you plan ahead, we’d recommend making a budget. When creating a retirement budget, it’s best to break down any potential future spending into two categories:

  • Essentials - This is what you’ll need to cover basic living needs like food and utility bills. This will also include household must-haves, any necessary maintenance and daily travel

  • Non-essentials - This money should be set aside for anything you enjoy doing on a daily, weekly or monthly basis. This could include things like eating/drinking out, leisure activities and holidays - whatever you enjoy

Once you have a better idea of your income and spending needs in retirement, you’ll then be able to work out how much money you’re likely to be left with.

Modern retirement takes many forms, and an increasing number of people are choosing to keep working until a later age, sometimes on a part-time basis. Are you going to gradually prepare for retirement or immediately stop working at a certain age?

Along with changing work habits, consider how major events could impact your finances post-retirement. Getting prepared early will ensure you have a retirement plan in place, should the need for long-term care strike. Your next of kin might also need some financial help, whether this is with education or getting on the property ladder. Again, these are things that need factoring in.

Figure out how much money you'll have in retirement

5. Will you need to provide for others?

When you retire and after you’ve passed away, will you need to make provisions for a partner, next of kin or another family member? This could be an elderly parent in need of financial help, a grown-up child buying their first home or ensuring your significant other is properly set up and cared for.

When it comes to passing on your pension after you pass away, you can nominate to do this while you’re still contributing to your pension plan or at the time you turn this into a guaranteed or flexible income. If you take your pension savings as cash and have a will, then it’ll be up to you to decide who you’ll leave any money that you have left.

6. Get financial advice or independent guidance

To best understand your ingoings and outgoings, you should access any and all support available to you, including money advice services. Pension Wise is a free and impartial guidance service offered by the Government once you reach 50. This service aims to help you understand your retirement options. You can reach them through the link above, or by calling on 0800 280 8880. You can also book an appointment for a face-to-face consultation about your retirement plan.

Alternatively, you might also like to contact an independent financial adviser or pensions advisory service. Though the information and advice you’ll receive will probably be more tailored and in-depth, it can end up being quite costly.

Get financial advice or independent guidance about when to retire

7. Emotionally prepare for retirement

While being able to leave the world of work behind and the abundance of free time that goes with this might sound appealing to many, it can still be difficult to adjust to. A loss of routine and a different sense of purpose can lead to some recent retirees feeling low.

Along with the financial preparations we’ve discussed, it’s important to focus on your wellbeing in retirement. One of the best ways to do this is by giving your days a sense of structure and routine. You should also make an effort to continue socialising with any work friends you’ve left behind.

Here are a few other ways to emotionally prepare for retirement:

  • Keep in regular contact with family and friends, even if only by text

  • Create a daily and weekly routine to give your days a sense of purpose

  • Do regular exercise

  • Join local groups that offer hobbies for people of a similar age

  • Plan plenty of other activities to look forward to

Living in a retirement community encompasses many of these points. By living amongst similarly-aged retirees in a friendly, self-contained yet independent environment with heaps of activities and things to do, residents’ wellbeing will massively benefit. A lack of socialisation is also much less likely to be a problem, so they’re definitely an option worth looking into!

Other Retirement Advice

Here are a handful of extra pieces of advice to help you prepare for and ease into retirement.

What benefits will you receive?

Here are the benefits you could potentially claim in retirement:


  • State pension
  • Pension credit


  • Council tax

Heating costs

  • Winter fuel payment
  • Cold weather payment
  • Warm homes discount scheme
  • Insulation and heating schemes

Disability and care benefits

  • Disability living allowance
  • Attendance allowance

Travel and TV benefits

  • Bus passes
  • Travel concessions
  • Free passport
  • Free TV licence

Benefits for war widows or widowers

  • Medical costs for war pensioners
  • War disablement pension

Can you retire early?

There’s no longer a fixed age at which you have to retire - the decision is up to you. With that being said, before giving up work, you’ll first need to be in a secure financial position to fund your retirement years.

The removal of the default retirement age in 2011 means that the decision to retire is now in the hands of individuals. In most cases, you can’t be made to retire when you reach 65.

However, it’s still possible for certain employers to impose a compulsory retirement age, assuming they can objectively justify it (e.g. police officers or doctors).

So to answer the question, yes, you usually can retire early (where it’s financially sensible to do so).

Retirement Living developments offer safe, secure and comfortable housing with retirees in mind. With Lottie, you can pick from several stylish retirement living options throughout the UK. Choose between 1-bed, 2-bed and 3-bed properties with varying levels of care and support available.

Check out the very best retirement living villages and homes that we have to offer!

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