Retirement: Our top 10 tips you need to know

Finances and retirement

One of the most crucial aspects of retirement is your finances.

How will you pay for living expenses once you are no longer earning a regular salary or wage?

It pays to plan for your retirement as early as you can.

This can include paying into personal pensions, making investments, clearing debt and paying your mortgage off. 

We also need to consider aspects of financial life such as insurances, and claiming the benefits you might be entitled to. 

Am I eligible for a State Pension?

As soon as you reach state pension age, you should be eligible for a pension. State pension age in the UK can be calculated via the Government website.

You should then check how much state pension you will be eligible to receive. 

The maximum amount of new state pension in the UK is currently £185.15 per week (correct in 2022). 

How much will I get?

How much state pension you will get depends on how much national insurance you have paid over your lifetime. 

If you have missed some national insurance contributions, you may be able to pay back what you owe. 

This will top up your pension, though you may not still be eligible for the maximum amount depending on your situation.

Do you pay tax on a pension?

Yes, your state pension is a taxable income. 

In other words, your income from your state pension is not exempt from paying tax on. 

Many people have a private pension as well as their state pension.

If the sum of your pensions exceeds the tax free allowance, you will have to pay tax on the excess. 

What is the tax threshold for pensions?

For example (at the time of writing, 2022), you can earn up to £12,750 per year without paying any tax. 

If your state pension is the maximum of around £9350 per year, you won’t pay any tax on it. 

If you also have a private pension paying over £3400 a year, this will take you over the tax free allowance threshold. 

Any pension payments, investment income, or any other income you receive on top of this will all be subject to tax.

If you receive any benefits that are not tax exempt, you may be in the same situation. 

Taxable benefits include:

• Widow’s pension
• Carers allowance
• Pensions paid by the industrial death benefit scheme

Can I keep on working whilst I claim a state pension?

You can stay employed for as long as you want, and continue to claim your state pension. 

However, as we saw in the example above, this may change your tax bracket depending on what you earn overall. 

If you stay in employment, your income might affect how you claim some benefit. 

For example, your income may be too high to claim pension credit, council tax support, or housing benefit. 

You will no longer have to pay national insurance on your earnings once you are claiming the new state pension.

If you choose, you can defer claiming your state pension. 

Your state pension will increase while you don’t claim it. It increases at a rate of 1% every 9 weeks, or 5.% for every full year you defer.

Private Pensions

Everyone’s situation is unique regarding private pensions. 

You should get a yearly statement of what is in your private pension from each provider. They will also tell you how much they will pay you per year when you choose to draw on it. 

You may choose to discuss your personal situation with an Independent Financial Advisor, or your pension provider.

Benefits for pensioners in retirement

Once you reach state pension age, the amount of benefit you can claim is usually enhanced. 

There are a good many benefits for people of state pension age, though you may not be eligible for all of them depending on your situation. 

Be sure to check with the DWP what you might be entitled to.

Pension Credit

This comes in 2 parts:

Guarantee credit is for those on a low income, for instance, if you didn’t make enough national insurance contributions. 

It tops up your state pension to a max of £177.10 per week per person. 

Savings credit contributes toward money you have saved for your retirement. You may be able to claim up to £14.01 per week per person.

Winter Fuel payment

A one-off annual payment of £100-£300 paid automatically as part of your pension. 

Council tax reductions

25% discount for living alone. Other discounts are available for those on very low incomes or some other benefits. People with dementia may get an additional 25% discount.

Attendance allowance

This is for those who need personal care thanks to illness or disability. 

You can sometimes claim this if you live in a care home, so enquire as to your eligibility.

Should you work past the retirement age?

This is a very personal choice to make, and it isn’t going to work for everyone.

You will need to weigh up your financial situation, your health, and if you want to remain at work or not. 

Debt and retirement

Do you have debts you don’t want to take into retirement?

You can speak to an IFA about how to make payment plans to clear your debts as soon as possible. 

Alternatively, talk to the providers of the debt and see what they can do to help. They might be able to suggest an adapted payment plan to make it easier for you to pay off the debt.

Paying off debt from a reduced income such as state pension could make paying for living expenses difficult. 

If it is financially possible for you, plan to pay off any debt before you retire. 

Downsizing vs staying where you are

Many people love their home and have no wish to move out of it.

But downsizing and moving to a small home is something that many people choose to do when they retire. But it isn’t right for everyone.

There are pros and cons of either downsizing or staying put. It’s about figuring out what works best for you and your family. 

Here’s a few questions you can ask yourself to help make the right decision for your circumstances:

Financial considerations of downsizing:

• If you sold your current home and moved to a smaller property, would you then have more money for your retirement fund?
• Will your bills be reduced if you downsize?
• Would a smaller place have more efficient heating?
• Can you afford to move and the associated fees?
• Would any increase in savings be enough to offset any change in benefits?

 Lifestyle considerations for downsizing

• Are there benefits to downsizing to a more manageable place? 
• Will cleaning and housework be easier? 
• Would you still be able to have people to stay? 
• Do you want a fresh start somewhere new?
• Will moving help you make new friends?
• Is there enough to keep you occupied and challenged where you are?

Thinking about future care needs

• Are you likely to need or want to move to somewhere with more support in the future, like assisted living? Would downsizing now make that move easier in the future?
• Have you considered moving to a retirement village community where you would be surrounded by people of similar age?

Our top 10 tips for retirement 

Just like throughout life, there will be good times and less good times in your retirement. 

And in order to weather life’s inevitable storms it’s prudent to have prepared, even just a little bit, for those tricky times.

So here’s a few tips that will help you adjust to your new routine and the freedoms that retirement brings.

Tip 1: Plan your finances

We’ve already done a deep dive on finances, especially pensions and benefits, so we don’t need to go into too much detail here. But in summary, explore all the options that are available to you and make sure you have planned for your retirement.

It is never too late to start planning your finances.

Tip 2: Make a bucket list to get the most out of your leisure time

First up, make a list of all things you want to do with your free time. 

Maybe it’s baking, learning an instrument, or taking up ballroom dancing. 

Perhaps volunteering or finally writing that novel. You might even have a business idea you have been longing to try out. 

Whatever your retirement, get them down into a list. 

Work out what you can afford, and what is your priority, and make your plan accordingly. 

Tip 3: Spend quality time with loved ones

Remember all those events or occasions that missed out on because you couldn’t take time off work? Well that doesn’t affect you now and you can make up for lost time.

Plan trips and events with your loved ones and start creating those memories.

Or maybe even plan time into your weekly schedule so you can help with child care or take a grandchild swimming each week. 

Tip 4: Don’t neglect your sense of purpose

Be sure to add things you will feel a sense of satisfaction from, not just leisure activities. 

This could be a volunteer or caring role, running a local group, or even a part-time job. Whatever has meaning for you. 

This sense of accomplishment is important to maintain your self-esteem. 

Having all of your aims on a list will help you manage when you feel low. You can remind yourself of the things you have going on and that you are a vital, active person.

Tip 5: Plan ahead for hobbies

Plenty of people don’t have time for hobbies while they are working full time. 

You will need something to fill your 9-5 when that job no longer exists. 

You might take up a sport, art, craft, fishing, many hobbies can enrich your life. Add in some big projects like writing a blog or coming up with a community volunteer project. 

Take up dancing or an instrument and fit in plenty of fresh air and exercise to keep you fitter and active for longer.

Tip 6: Accept your new lifestyle

It can be tough for some people to accept that their working days are behind them. 

We all struggle with change so if you find yourself in this situation then don’t be too hard on yourself.

There’s still plenty to achieve during retirement if you choose to. 

Try not to dwell on your working past. Leaving it in the past will help you enjoy your present all the more.

Tip 7: Maintain a nutritious and balanced diet

What you eat in retirement is important is just as important as ever. However, without the structure of a working day, it might be easier to add in more snacks than is wise. 

You may also indulge more in treats when meeting friends in cafes, for example. You may also have more time to bake, or go to restaurants to socialise more than you used to. 

Eating a diet full of whole foods and plenty of vegetables is important for general health. It can also help prevent the onset of heart disease, type 2 diabetes and other conditions. The Mediterranean diet also has benefits for arthritis sufferers, and supports health.

Plenty of healthy fats, very little processed food and sugar, and lots of whole foods are recommended.

Tip 8: Exercise and keep on the move

The NHS recommends at least 150 minutes of physical activity a week to stay healthy. 

Ideally, older people should take part in some activity every day. This can include fast walking, or anything that makes you feel slightly out of breath. 

If this is hard for you try to get up and move around as much as you can – chair yoga for seniors is an easy way to keep moving.

Start each day with some morning stretches and if you’re feeling energetic then it’s never too late to do the couch to 5K plan for seniors. 

Any kind of water based fitness activity is great for older people to stay fit and supple.

Aqua aerobics is particularly helpful for those with reduced mobility as the water supports an increased range of motion. 

Tip 9: Keep your brain active

More and more research is being done into brain function in older people. The results seem to be; use it or lose it. 

Many types of brain exercises are helpful. These could be crosswords or learning a new language or instrument.

Taking up something like ballroom dancing – which requires learning physical steps – is good for both the body and brain.

Not only this, but life is more interesting with stimulation. 

You can use Duolingo to learn a language for free in a fun game style of learning.

YouTube has a great many tutorials for all sorts of hobbies and pastimes. Adult education courses are also easy to access for many people, and often are reasonably priced.

Meditation also has good links to brain health and general wellbeing. Our guide on meditation for seniors has tips to get you started.

Tip 10: Don’t be afraid to prepare for care

If you live a long and happy retirement it is likely that you will require a level of care and support at some point. 

Putting a proper care plan in place is a way to stay empowered as you age and maintain your independence. 

You can use Sweet Pea to organise all the care and support you need, including domestic help, when you need it.

Phased retirement

If you think that full retirement might be too challenging at first, then it might be helpful to transition gradually into retirement. 

Ask your employer if you can reduce your working hours, also known as phased retirement.

In most jobs, there is no longer an enforceable retirement age. This means that an employer can’t force you to leave your job when you reach pensionable age. 

Approach your employer

Some employers will be more amenable to phased retirement than others, depending on the nature of their business. 

Try speaking to your company to see what options there are. You may choose to work flexibly, or take a different job within the organisation that lends itself better to phased retirement. You may work part-time and take some of your pension to make up the difference in earnings.

If this is possible, it could be a good way to segue into retirement without any surprises.

There are some exceptions. If you’re working in the armed forces, the police force or similar services, then there is an upper age limit. These types of jobs typically have a good pension provision so speak with your manager if you have any concerns.

Retirement, the way you want it

It’s never too late to start planning for retirement.

The important thing is that you organise a retirement that works for you so you can enjoy your free time in the way that you want to.

If you’ve still got unanswered questions, like, when can I retire? or what is the retirement age of women? or if you need more information then check out our dedicated retirement guides section, where you’ll find heaps of content to help you plan.

Find a carer today

It’s easy to find a carer who can help you or your loved stay independent at home for longer.

Just use the Sweet Pea care matching service. All you have to do is enter your care needs and we’ll do all the hard work for you!