Retirement
Some people long for retirement, looking forward to the day
they can give up work and at last have time to themselves. Others
feel apprehensive about the changes it will bring to their lives
and how they are going to cope financially. However you feel,
retirement is a time that brings with it enormous change. This
section aims to help you think about retirement and plan for how
you would like to live during this stage of your life.
Step 1: Where money comes from in retirement
Where our money comes from once we have retired is usually
different to where it came from when we were younger, but it is
still common for money to come from a number of different
places.
Pensions
- State Retirement Pension – this is money that the
government pays when you reach State Pension age. This used to be
60 for a woman and 65 for a man but this is changing for a lot of
people. You can work out the exact date of your state pension age
by using the
state pension age calculator (link opens in a new
window) on the Government's Directgov website. Some people
do not qualify for State Retirement Pension.
- Personal and occupational pensions – many people have saved
money into personal pensions during their working lives and some
people have also worked for companies that have contributed towards
their pensions (called an occupational pension). Your pension
providers can help you work out how much you will be getting and
explain what you need to do when you reach retirement age. If you
think you have had a pension in the past but you do not have the
details now, the
Pension Tracing Service (link opens in a new window) may be
able to help you.
See Pensions and State Retirement Pension
Benefits
Many benefits continue into retirement and there are others
designed specifically for older people. See our section on Benefits for more information and guidance on what
you could be eligible for.
A note on retiring early
- Nobody has to work until state pension age. In fact many of us
retire early, because we choose to, we have been made redundant or
need to give up work because of ill health. If you do retire early,
it’s important to understand that your pensions and benefits may be
affected.
- You can only claim your State Retirement Pension when you reach
state pension age. If you retire early, you may get less State
Retirement Pension when you do reach state pension age. This is
because you have to work a certain amount of years to qualify for
full State Retirement Pension. From 6 April 2010, you need 30
qualifying years of national insurance contributions (previously,
men normally needed 44 years and women 39 years). You may also
qualify if you have worked less than this because of childcare
responsibilities or because you were caring for someone who is ill
or disabled
- If you have a personal or company (occupational) pension, the
earliest you can receive it is when you are 55(from April 2010)
unless you are suffering from serious ill health. As with the State
Retirement Pension, the earlier you take your pension the less
money you are likely to receive because you will have paid into the
scheme over a shorter period of time. Each pension has different
rules so you will need to check the details with your pension
provider. The Government's Directgov website has
more information on the rules on taking personal pensions (link
opens in a new window).
Savings and investments
Some of us use money that we have managed to save up throughout
our working lives to supplement our income once we reach retirement
age. Think about any savings or investments that you have that you
could put towards retirement. See Savings
It is also quite common for homeowners to sell up and move
somewhere smaller. By doing this, they usually have money left over
from the sale of their home that they can use to live on. Smaller
homes tend to cost less to run, which also helps money go further
in retirement.
Wages
Just because you reach retirement age, you do not have to give
up your job. There are rules about age discrimination which mean
that your employer cannot force you to retire before normal
retirement age (This is different to your state retirement age. It
is 65 or higher, depending on what your contract of employment
says). There are also rules about how your employer can force you
to retire when you reach normal retirement age. For example, they
have to give you written notice of the date you are due to retire.
You have a right to ask to stay on beyond that date and the notice
must tell you this as well. The notice should be issued between six
and twelve months of the date you are due to retire.
Many people keep working because they enjoy it or to earn money
for as long as possible.
If you decide to carry on working:
Remember you can still claim your State Retirement Pension
Your tax allowance increases when you reach 65 and then again at
75, which means you can earn more money before you have to pay any
tax on it. See Tax.
Once you have a good idea of where you think your money is going
to come from in retirement, look at the next section, which aims to
help you manage your money.
Step 2: Managing money in retirement
By the time we reach retirement age, it’s common for the big
expenses in life to be behind us. For example, homeowners have
usually paid off their mortgages and our children are usually grown
up and fending for themselves. Because of this, experts suggest
that in retirement we can live on two-thirds of the money that we
needed when we were younger.
Look at our section on Budgeting. You can work out how much
you’re spending now and also have a go at creating a budget for
when you have retired
If you are concerned about debts, see Debt
Making your money go further
If you are concerned that you are not going to have enough money
to get out and enjoy yourself in retirement, remember to:
Make the most of the free and discounted transport available to
people of retirement age.
Museums, galleries, cinemas, theatres and sports centres often
offer discounts to people of retirement age. Take advantage of
these as well as off-peak deals
Have a look at our Money Saving
Tips
Thinking of retiring abroad?
- It is not uncommon for some of us to move abroad when we
retire, perhaps because we want to live somewhere with a warmer
climate or because we want to return to our country of origin. If
retiring abroad appeals to you, there are a few things to bear in
mind.
- It’s usually possible to receive your
UK State Retirement Pension (link opens in a new window) if you
move abroad. Check before you go and also find out if you will get
increases when pensions go up.
- If you leave the UK permanently, you are usually no longer
eligible for treatment on the National Health Service. It is
important to check what health services are available to you in the
country you are thinking of moving to and whether you will have to
pay for these
- It’s a good idea to seek professional advice about the tax
system in the country you are moving to so you will know what you
will be expected to pay. They vary a lot from country to
country
- If you have savings and are planning to keep them in British
money (sterling), remember that the exchange rate between one
country’s money and another can go up and down, which means the
value of your savings will also go up and down. Because of this,
you could find yourself with less money to live on than you thought
you were going to have.
Step 3: Would you like to know more?
Turn2us - to access benefits & grants.
