Planning your retirement

Find out how much your retirement income is likely to be. First, you should work out your potential retirement income. Perhaps you'll be using the State Pension, a workplace or personal pension plan or a combination of these. Either way, there are several steps you can take to find out what these are potentially worth, from requesting State Pension statements to tracing lost pensions.

Your State Pension

Find out when you can start receiving the State Pension and how much you will receive.

• Check your State Pension age.

  The State Pension Age CalculatorOpens in new tab will tell you when your State Pension is payable.

• Find out how much your State Pension is worth and obtain a forecast

  Get an estimate of your State PensionOpens in new tab at the GOV.UK site.

• Boost your National Insurance (NI) contributions.

  If you have an NI contribution record of less than 35 years, you won't receive a full State Pension. Find out how to add to your contributionsOpens in new tab.

• Find out if you qualify for Pension Credit.

  If you're on a low income, the Pension Credit CalculatorOpens in new tab can tell you if you're eligible for this benefit.

• Consider delaying the State Pension.

  If you choose to defer your State Pension, it could be higher when you start to take it. Find out moreOpens in new tab.

It's very likely that you have had several retirement savings accounts throughout your working life. There are various ways you can find lost and forgotten accounts.

You can trace your pensions by using the Government's Pension Tracing ServiceOpens in new tab and contacting your previous employers and pension providers yourself.

The decision to transfer a pension may not always be a straightforward one. While there can be advantages, there are also risks that you need to consider too.

Understanding how your pension benefits will be taxed is an important part of developing your retirement income plan.

You can usually take up to 25% of your retirement savings account as a tax-free lump sum subject to the availability of any allowancesOpens in new tab. Tax on income you receive from a pension is then calculated in the same way as any earnings from employment. For most people there’s an annual personal allowance, which means that you can have an annual income of up to £12,570 (2024/25 tax year) that’s not taxed.

Your total income could include:

• The amount of State Pension you'll receive (either the basic State Pension or the new State Pension)
• Any additional State Pension income
• A private pension (workplace or personal)
• Earnings from employment or self-employment
• Any taxable state benefits you get
• Any other income including that received from investments, property or savings.

In England, Wales and Northern Ireland income above this is subject to tax at rates of 20%, 40% or 45% depending on your overall total taxable income. In Scotland it's 19%, 20%, 21%, 42%, 45% and 48% depending on your overall total taxable income.

If you have any further questions around how tax could affect your retirement, you can find additional support on the Money HelperOpens in new tab.

If you, or your partner, are receiving, or entitled to state benefits, you may need to declare any money you take from your pension pot to the Government. State benefits include:

• universal credit
• child benefit
• or anything similar where the amount you receive depends on how much you earn or have in savings.

This could have an impact on the level of benefit you’re entitled to. For more information visit the gov.uk websiteOpens in new tab.

There are many advantages to continued employment, whether full or part-time, including topping up your income, keeping active and being able to work flexibly around your lifestyle.

If you start to take money from your pension pot, the amount that can be contributed to your pension in the future before you have to pay a tax charge may reduce. This is known as the Money Purchase Annual Allowance or MPAA.

For most people, the total amount that can be contributed to their pensions each tax year which they'll receive tax-relief on is £60,000. This includes any contributions from your employer. But if you trigger the MPAA, this will reduce to £10,000 a year (tax year 2024/2025).

You should also consider how your money will be treated at the time of your death and whether there’s enough money left to provide for your dependants.

With some options your money may be subject to inheritance tax, so it’s important to consider this before you decide.

Beware of scammers. It's now illegal to cold call, so your alarm bells should ring if someone contacts you unexpectedly about your pension.

Be particularly wary of people that claim to be approved government advisers and try to persuade you to take money from your pension. For more information about scams please visit fca.org.uk/scamsmartOpens in new tab

You can receive free pensions guidance to help you. Often, it will be in the form of a short telephone discussion or online webchat, during which a retirement expert will discuss the options you have for taking your retirement savings and what to do once you’ve made a decision. The guidance cannot advise you on what option you should make given your personal circumstances.
You can get free guidance from the following places:

• MoneyHelper – the government’s free and impartial service, offering guidance to make money and pension choices clearer. To find out more or book an appointment visit moneyhelper.org.ukOpens in new tab or call 0800 011 3797Opens in new tab.
• Pension Wise – a government service from MoneyHelper that offers free, impartial guidance about your defined contribution pension options if you’re 50 or older. To find out more or book an appointment visit moneyhelper.org.uk/pensionwiseOpens in new tab or call 0800 138 3944Opens in new tab.