The 5–10 years before retirement are the most financially critical of your entire working life. Decisions made now about your pension, tax planning, debt, and income structure will determine whether you’re comfortable or constrained in retirement.
Here’s a comprehensive checklist of everything to review and action.
1. Check Your State Pension Forecast
Do this today. Visit gov.uk/check-state-pension.
Your forecast shows:
- Your projected State Pension at retirement age (currently 66, rising to 67 from 2026–2028)
- Your current NI qualifying years
- How many more years you need for the full State Pension
- Gaps in your NI record and whether you can fill them
Full new State Pension (2026/27): £221.20/week = £11,502.40/year
If you have gaps: You may be able to fill them with voluntary Class 3 NI contributions. At £824/year per qualifying year purchased (and 3+ years of State Pension to collect), it can be an exceptional return. Deadline to purchase historical years at transitional prices has now passed (was April 2025) — but future gaps remain fillable.
2. Track Down All Your Pensions
The average UK worker has 11 jobs in their lifetime — and likely has pensions scattered across multiple providers.
Find lost pensions:
- Use the government’s Pension Tracing Service at gov.uk/find-pension-contact-details
- Contact former employers’ HR departments
- Check old payslips for pension provider names
Once found, request a current value (or CETV for defined benefit schemes) and annual statement.
3. Quantify Your Total Expected Retirement Income
Build a full picture of all income sources:
| Source | Estimated annual amount | Starts at |
|---|---|---|
| State Pension | Up to £11,502 | Age 66–67 |
| Defined benefit (final salary) pension(s) | £ | Scheme retirement age |
| Defined contribution pension(s) — estimated | £ | Age 57+ (from 2028) |
| ISA and savings income | £ | Any time |
| Rental income (if applicable) | £ | Any time |
| Part-time work (if planned) | £ | As relevant |
| Total | £ |
Compare to target income: What do you need in retirement? The PLSA standards suggest £31,300–£43,100/year for a comfortable single-person retirement.
4. Address the Gap — If There Is One
If total projected income falls short of your target, your options are:
| Option | Notes |
|---|---|
| Increase pension contributions | Every year earlier than retirement is more impactful |
| Top up via SIPP | If you’ve used employer scheme to max; allows flexible contributions |
| Defer retirement by 1–3 years | More contributions + fewer years drawing; significantly increases pot |
| Defer State Pension | Increases State Pension by ~5.8% per year deferred |
| Reduce target spending | Reassess what “comfortable” means to you |
| Downsize property | Release equity; reduce housing costs |
5. Pension Consolidation Decision
If you have multiple small DC pensions from different jobs, consider whether to consolidate:
Benefits of consolidation:
- Simpler to manage and monitor
- Potentially lower charges on a larger pot
- One investment strategy, not several
Risks:
- Losing valuable guaranteed annuity rates on older pensions
- Losing protected pension age (some old pensions allow access from 50)
- Exit charges on some older policies
Never consolidate a defined benefit (final salary) pension without independent financial advice. DB pensions guarantee income in a way DC cannot replicate easily.
6. Review Investment Risk in Pension
Most default pension funds use “lifestyling” — automatically shifting toward lower-risk assets as you approach retirement. Check:
- Is your pension in a lifestyling fund?
- Is the de-risking timeline appropriate? (Funds often assume 65 as retirement — if retiring later, you’re de-risking too early)
- If drawing down rather than buying annuity, you may want to stay invested longer
Contact your pension provider to understand what your money is invested in.
7. Pay Off High-Cost Debt Before Retirement
Entering retirement with debt significantly increases your required income.
Priority:
- Credit cards and unsecured loans — pay off as quickly as possible
- Car finance — structure so it ends before you retire
- Mortgage — consider whether overpaying to clear it before retirement is optimal
Mortgage payoff: Clearing your mortgage before retirement is not always mathematically optimal (money in pension may grow faster), but the psychological benefit of cost certainty can be significant. Run the numbers, then decide what suits you.
8. Tax Planning in Pre-Retirement Years
The 5 years before retirement are prime tax planning territory:
Annual ISA allowance: Maximise it. Up to £20,000/year into a Stocks and Shares ISA can be sheltered from capital gains and income tax — tax-free income or withdrawals in retirement.
Pension tax relief: Higher-rate taxpayers get 40% relief on pension contributions — meaning a £10,000 pension contribution effectively costs you £6,000. If you’re still a higher-rate taxpayer, these are your last years to benefit at the 40% rate.
Annual Allowance: £60,000/year (2026/27) including employer contributions. You can carry forward up to 3 years of unused allowance — check whether you have unused allowance to utilise.
Salary sacrifice: If your employer offers it, salary sacrifice pension contributions save you both income tax and National Insurance on contributions. Maximise this.
9. Plan Your Retirement Income Structure
How you draw income in retirement affects your tax significantly. The main options:
| Option | What it means | Best when |
|---|---|---|
| Annuity | Guaranteed income for life in exchange for pot | Predictability valued; poor health; DB-style security wanted |
| Flexi-access drawdown | Keep pot invested; draw as needed | Flexible income needs; healthy; estate planning motivation |
| UFPLS (Uncrystallised Fund Pension Lump Sum) | Take from uncrystallised pot; 25% tax-free each time | Ad hoc flexibility |
| Combination | Mix of above | Most retirees use a blend |
Tax planning in drawdown:
- Draw income up to the basic rate threshold (£50,270) to avoid 40% tax
- Use ISA withdrawals for top-up (tax-free, doesn’t count as income)
- Take tax-free lump sum spread over years not all at once
10. Plan Your State Pension Timing
Defer or take? Each year you defer State Pension increases it by ~5.8%. Break-even point for deferral (when you’ve earned more by deferring) is approximately 17 years.
If you’re healthy and expect to live past 83–85, deferring can be financially worthwhile. If you need the income from 66, take it.
11. Protect What You’ve Built: Insurance Review
Life insurance: In retirement, the need typically reduces (no mortgage, children independent). You may not need term life insurance at all after 60.
State of health and condition-specific planning: Consider:
- Lasting Power of Attorney (LPA) — protect your financial affairs if you lose capacity. See our LPA guide
- Healthcare planning — private health insurance can prevent delays in elective procedures
- Care costs planning — consider care annuities or earmarking assets
12. Get Your Affairs in Order
| Task | Why |
|---|---|
| Up-to-date will | Ensure assets go where you intend |
| Lasting Power of Attorney (financial + welfare) | If you lose capacity, someone you trust handles finances |
| Update pension nominations | Pension not covered by will — update nominations |
| Death in service: check beneficiaries | Employer life insurance |
| Beneficiary designations on all policies | Insurance, ISAs |
Pre-Retirement Financial Checklist
| Task | Timeframe | Done? |
|---|---|---|
| Check State Pension forecast | 10 years before | ☐ |
| Trace all pensions | 10 years before | ☐ |
| Calculate total projected retirement income | 10 years before | ☐ |
| Identify and quantify income gap | 10 years before | ☐ |
| Increase pension contributions if gap exists | Now | ☐ |
| Review pension investment risk/lifestyling | 10 years before | ☐ |
| Consider pension consolidation | 7–10 years before | ☐ |
| Pay off high-cost, then all debts by retirement | 5–10 years before | ☐ |
| Maximise ISA allowances | Every year | ☐ |
| Plan retirement income structure | 3–5 years before | ☐ |
| Review and reduce life insurance | 5 years before | ☐ |
| Make or update will | Now | ☐ |
| Create Lasting Power of Attorney | Before retirement | ☐ |
| Plan State Pension timing (defer vs take) | 2 years before | ☐ |
| Consider independent financial advice | 3–5 years before | ☐ |