Where do you want to be 10 years from now? This question doesn’t just apply to career paths, it’s also worth asking in relation to your finances.
If your answer is ‘enjoying my retirement,’ and ‘quitting the nine-to-five grind’ now is the time to take a closer look at your savings and investments to ensure they are retirement-ready.
At this stage you have time on your side — a decade gives ample time to ensure there are solid foundations to your financial plans. But don’t be lulled into a false sense of security; 10 years can soon fly by! Failing to act now could mean working longer than planned or downsizing your retirement aspirations.
At this point, your focus should be on understanding your current position, creating a realistic plan and boosting savings levels. This checklist offers some useful pointers to help you build a robust retirement plan.
Get a State Pension forecast
The State Pension, currently worth around £221.20 a week, is a key part of most people’s finances after retirement so you need to know exactly when this will be paid and what it will be worth.
The figure above is the full new flat-rate pension, but eligibility depends on your National Insurance contributions. The State Pension age is currently 66 but will begin to rise gradually to 67 from May 2026. This could affect the timings around stopping work and may mean you need to dip into savings or investments to cover any income gap.
Know how much you’re worth
Gather up-to-date statements for all your savings, investments, and pensions. Dig through old paperwork to ensure you haven’t lost track of older pension pots, particularly those linked to previous employers.
Alongside current valuations, check forecasts to see what these funds might be worth at your planned retirement date. Most pensions should include forward projections, but remember it is just this, a projection, and the exact fund size will depend on contributions made and underlying investment conditions. Remember, the value of investments can go down as well as up, so you may get back less than you invest.
If you have a defined benefit pension (also known as a final salary pension) this should show the salary-linked income you’ll receive at your set retirement date, which may differ from your state pension age.
Know how much you’ll need
Even if it’s just an estimate, think about your potential spending requirements in retirement. Will you still have a mortgage, or can you reduce or pay this off within the next 10 years? Will other debts also be cleared?
The Pensions and Lifetime Savings Association’s Retirement Living Standards provide helpful guidelines for typical expenditure levels for a “moderate” or “comfortable” retirement. Tools like Fidelity’s Retirement Planning Calculators can help you create a more personalised plan and ensure you’re on track for the retirement you want.
Supercharge your savings
Starting your retirement plan now gives you time to plug potential gaps. The decade before retirement often coincides with peak earning years, providing an opportunity to supercharge your savings.
Maximise tax-free savings vehicles like ISAs and Self-Invested Personal Pensions (SIPPs) but consider how you’ll use them in retirement. For higher-rate taxpayers, pensions offer generous tax relief on contributions, although income taken from pensions (except the 25% tax-free lump sum) is taxable. ISAs, on the other hand, allow tax-free withdrawals. A mix of both can provide flexibility and ensure long-term growth.
Remember, the value of investments can go down as well as up, so you may get back less than you invest.
Don’t overlook workplace pension contributions
Tax relief applies to all pensions, including workplace schemes and SIPPs. Workplace pensions typically come with employer contributions, which can significantly boost their value. Many companies offer “matching” arrangements, increasing their contributions if employees contribute more than the minimum — so make the most of these opportunities where appropriate. You wouldn’t turn down a pay rise from your company, so why turn down additional pension contributions, which are effectively deferred pay.
Consolidate investments
Managing multiple smaller pots can be time-consuming and may not be cost-effective. Ten years before retirement can be a good time to consolidate holdings, to ensure you are not paying over the odds on charges and your money is in a suitable investment strategy.
However, it’s important to understand that pension transfers are a complex area and may not be suitable for everyone. Before going ahead with a pension transfer, we strongly recommend that you undertake a full comparison of the benefits, charges and features offered. To find out what else you should consider before transferring, please read our transfer factsheet. If you are in any doubt whether or not a pension transfer is suitable for your circumstances, we strongly recommend that you seek advice from an authorised financial adviser.
Review your selected retirement age for your workplace pensions
Your retirement age is set automatically when you start saving into your pension. With 10 years to go, it’s wise to review this and select a date that is right for you. This is particularly important if you are invested in your pension plans' default investment option. As many plans have a strategy in place that aims to reduce the investment risk, by changing asset types, as you get closer to your selected retirement age. This approach aims to manage investment risk, but it doesn't eliminate it. So, if you’re planning on retiring earlier, or later than the date automatically set for you - it could make a difference to the level of investment risk your pension is exposed to as you near retirement.
It’s also important to highlight that you can’t normally access your pension until the age of 55. This is due to rise to 57 on 6 April 2028.
Make sure your nominated beneficiaries are up-to-date
It’s never easy thinking about what might happen after you pass away but deciding what to do with your pension savings is a small step you can take to gain control of the future. It’ll also give your loved ones one less thing to worry about at a difficult time. So it’s important to make sure your nominated beneficiaries for your workplace pension reflect your wishes and that your beneficiaries details are up-to-date (for example, their contact details may have changed since you nominated them).
Important information -This is for information purposes only and the views contained are not to be taken as advice or a recommendation for any product, service or course of action. Tax treatment depends on individual circumstances and pension rules may change in the future. If you need advice about how any of this information applies to you personally, you should contact an authorised financial adviser.