1. Get a State Pension forecast

You can get a State Pension forecast from the government. It will show how much State Pension you’ll get, and when.

In 2020/21, the maximum new state pension is £175.20 a week (£9,110.40 a year). But you may get more or less than this depending on your National Insurance contributions.

2. Find out how much your workplace pensions are worth

If you’ve been paying into workplace or private pensions, your annual statements should show you how much these are worth. Alternatively, you might be able to check online.

In addition, your pension provider should send you a ‘wake-up’ pack between four and six months before your agreed pension age which is usually between 60 and 65.

If you have paid into more than one pension pot, you’ll need to contact each provider separately to find out how much is in each one.

3. Trace any lost pensions

If you think you may have lost information about a previous pension, contact the government’s Pension Tracing Service at gov.uk/find-lost-pension.

The Pension Tracing Service is free and you’ll be asked to fill in a form including details of your previous employer or pension scheme.

Once the tracing service has located your pension it will give you details of the pension’s administrator.

4. Assess your savings and investments… and debts

As well as pensions, you may have other savings and investments that you could use to fund your retirement. These might include ISAs, cash savings, or property.

You should aim to start your retirement as free of debt as possible. Even if you have a decent pension pot, your income is likely to go down when you retire, so it’s best to pay off any debts before you retire if you can.

5. Work out how much you need in retirement

Think about how much income you are going to need in retirement. The figure should include essential income to meet your day-to-day living expenses such as household bills, as well as discretionary income for things like holidays and hobbies.

You also need to think about how this income requirement may change over time. Most people spend more when they first retire and are still active. Then spending tends to fall as people age, become less active, and cut back on travelling. But costs often go up again if extra care and support is required in later life.

6. Consider your pension options

Pension freedom rules were introduced in April 2015 and give people more choice and flexibility about how and when they take money from their pension pot.

You can usually take 25% of your pension as a tax-free lump sum in cash. Your main options with the remainder of your pension pot are to use drawdown to provide you with an income, or buy an annuity.

Another option is to take cash from your pension pot as and when you need it and leave the rest untouched where it can continue to grow tax-free.

7. Read up on tax

When you take cash from a defined contribution pension, only 25% of your pension pot is tax-free (the calculation for a DB scheme will be different).

The remaining 75% is taxed as earned income. If you don’t plan carefully, you could find yourself paying more tax than you need to. For many people, it might be more tax advantageous to take income from your non-pension savings, such as ISAs, first.

8. Shop around for an annuity

An annuity is a type of insurance product that will give you an income for the rest of your life.

Although you will have saved into a pension with one or more providers, you don’t have to buy an annuity from the same provider – you are free to shop around and compare rates offered by different insurance companies.

A financial adviser can help you compare rates and find the best option. Buying an annuity is a once in a lifetime decision – you can’t reverse it – so it’s crucial to take advice.

Annuity income is taxed just like any other income so it will be taxed at 20%, 40% or 45%.

9. Get advice

How to access your pension pot and arrange your retirement income is a big decision so it’s important to get it right.

Although it will cost you to see a financial adviser, it’s likely to be well worth the cost to be sure you’re making the right decisions, you’re not paying unnecessary tax, and that you will have enough money to fund your retirement until you pass away.

An adviser will look at all of your assets, work out the most tax-efficient way for you to fund your retirement and then put a personalised plan in place for you.

10. Watch out for scams

People approaching pension age are often a target for scammers keen to get their hands on victims’ pension cash. Some scammers claim people can unlock cash in their pension penalty-free, while others encourage savers to take their money out of pensions to invest elsewhere.

Whatever your age, be very suspicious of any unsolicited calls or emails about your pension and make sure you only take advice from a regulated financial adviser.