State pension freeze: Lord Jones raises issue of ‘unfairness’
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Having a decent nest egg to see you through is absolutely essential – but there are a number of other things you need to consider before taking the plunge into retirement. In the months leading up to your retirement, you should be absolutely sure you are ready for what comes ahead – and that will mean settling a few scores.
High level of debt
Having a high level of debt is one of the key signs you are not yet ready to retire.
Before you retire, you’ll need to determine if you have any debts that need to be refinanced.
It can be hard to refinance mortgages or other loans when you don’t have demonstrable income, so make sure to do this long before you give notice at work.
If you have other outstanding debts, such as loans for cars or holidays, these will also need to be paid off before you retire, otherwise, they will make a large dent in any spending plans you have.
Saving for retirement is crucial – and there are several steps that will tell you if you’re ready (Image: GETTY)
Once your paychecks stop arriving, bills don’t suddenly stop showing up (Image: GETTY)
No plan for major expenses
Once your paychecks stop arriving, bills don’t suddenly stop showing up – and the big ones can be the most damaging in your retirement years.
Planning out your cash flow takes considerable work, but for most potential retirees it is essential for making sure you don’t run out of money.
When you stop working, you will lose access to your employee benefits – this can include things like extra healthcare, so be sure to check if you can afford them on your own before retiring.
Having a high level of debt is one of the key signs you are not yet ready to retire (Image: GETTY)
Are you sure you have enough?
Working out what you want from your retirement is key when deciding to retire.
If you are planning to take numerous holidays, help fund grandchildren or make big changes to your lifestyle, you need to know if you can pay for this.
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According to the trade association Pensions and Lifetime Savings Association, the following annual income is required for retirement living standards:
Minimum: Outside London – £10,500; London – £12,700
Moderate: Outside London – £20,700; London – £24,700
Comfortable: Outside London – £33,900; London – £37,300.
Minimum: Outside London – £16,100; London – £20,300
Moderate: Outside London – £29,900; London – £34,200
Comfortable: Outside London – £48,800; London – £50,600.
You can claim state pension when you reach state pension age (Image: GETTY)
How do I check my pensions?
You can claim state pension when you reach state pension age, which is 66 for men and women, but this is unlikely to be the only form of income you have if you’ve saved over the years or contributed to a pension pot.
You can use the GOV.UK calculator to see how much state pension you will be entitled to.
This depends on the amount of National Insurance contributions you have built up over your life.
You will need to contact your employer to see what you may have in any work-based pension pots.