Important information - investment values and income from investments can go down as well as up, so you may get back less than you invest. Before transferring a pension, compare all the benefits, charges and features and always seek advice if you are unsure.
Milestone birthdays have a habit of making us pause for thought - especially as we get older. They can also make us ask some fairly uncomfortable questions.
When will I be able to retire? How much have I actually saved? And what do I need to think about now that retirement suddenly feels quite close?
Mind the pension gap
Pensions UK says a single person may need around £45,400 a year after tax for a comfortable retirement1.
Some of that could come from the State Pension, which is currently worth around £12,500 a year if you qualify for the full amount. But there may still be quite a gap to fill.
The most recent ONS pension wealth data shows that, among people aged 45 to 54 with private pension wealth, the median amount was around £80,000. For women, it was £57,900 – just over half the £108,100 recorded for men 2.
Watch: Pension opt-out: the worst retirement mistake you can make?
Life gets in the way
The reality is that not everyone does the ‘right’ thing when it comes to their pension.
Perhaps you took a career break to bring up children. Maybe you reduced your hours to care for a family member. Menopause, ill health, divorce or redundancy may also have changed your relationship with work over the years.
Or perhaps your pension simply took a back seat while you dealt with nursery fees, university costs, mortgage payments and the seemingly endless expense of feeding teenagers.
If this speaks to you, you’re not alone. Life happens. The good news is that reaching your 40s or 50s doesn’t mean you’ve left it too late.
You may still have many years in which to save and invest. Even relatively small changes could make a difference to the choices available to you later.
Here are my top financial tips if you find yourself thinking - like I did - that your finances could do with a midlife MOT.
1. Be realistic about when you want to retire
The earliest age you can normally take money from your retirement savings is 55 (57 from 2028). But accessing your pension and being able to stop work are two different things. You need to be honest about whether you can afford to retire… yet. Or you might decide to reduce your hours or retire gradually instead.
It’s also worth checking the retirement age recorded on your pension accounts. Some investments automatically begin changing as you approach it. If your account says 60 but your plan is 68, it may need updating.
The choice is yours, but it’s good to be realistic about your retirement age as this helps you plan your saving and investing options.
2. Think about how much you might need
How much you need will depend on the retirement you want.
Will you still be paying rent or a mortgage? Do you plan to travel? Will you continue supporting your family? And how many lunches out, gardening projects or ill-advised online purchases are likely to make it into the budget?
Fidelity’s retirement calculators can help you look at different parts of the picture. You can check whether you’re on track, see how paying in a little extra could affect your pension pot, estimate the tax on future withdrawals and explore how long your money might last if you use pension drawdown.
They won’t predict the future, but they can help you understand where you stand today - and what a few small changes might do.
3. Ask yourself if you can contribute more
Even putting away an extra 1% could make a big difference over time. And make sure you max out on any company pension contributions that are on offer. After a while, you probably won’t even notice the money coming out as it’s deducted automatically. If you get a pay rise or bonus, you may also want to think about adding this to your pension pot. Small sacrifices now could certainly benefit you in the future.
- Use our power of small amounts calculator to see the impact small changes can have on your pension pot.
4. Think about bringing your pensions together
I’ve worked for a few companies over the years. One of the best things I did to help me keep track and manage them was to bring them to one place. It really cut down on admin time as I had a single view of my pension pot.
- Learn how you can take control of your pensions by bringing them together.
- Use the government pension tracing service to track your pensions down
5. Consider financial advice
Whether you’re ready to retire or not, financial advice could give you greater confidence in your decisions. Pensions can be particularly complex, especially if your finances are more involved or you have a significant amount to invest.
6. Talk to Fidelity’s retirement service
If you hold a SIPP with us, or are looking to transfer to us, our retirement specialists are there to help. You may be interested to know that our SIPP has been recommended by Which? for the sixth year running.
7. And finally… get your financial ducks in a row
It’s not nice to think about, but none of us lives forever. Aside from any property, our pensions tend to be the next biggest asset we own. Make sure you complete an expression of wish, also known as a beneficiary nomination. This tells your pension provider who you would like it to consider when deciding who should receive your pension savings after your death. Remember to keep it updated too.
If you have a SIPP with us, you can update your beneficiaries in the Fidelity app. Open the app, tap your initials in the top-right corner, then select ‘Pension and beneficiaries’.
Sources:
1 Pensions UK - Retirement Living Standards
2 ONS, Pension wealth: Wealth in Great Britain, April 2020 to March 2022, published January 2025.
Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Tax treatment depends on individual circumstances and all tax rules may change in the future. Withdrawals from a pension product will not be possible until you reach age 55 (57 from 2028). 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 one of Fidelity’s advisers or an authorised financial adviser of your choice.
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