5 Steps to Get Ready for Retirement in 2024

If You are Preparing for Retirement, Discover the 5 Crucial Steps for Effective Retirement Planning, Including Setting Goals, Estimating Income Needs, and Seeking Professional Advice…
  • Last Updated: 30 Jan 2024
  • Fact Checked
  • Our team recently fact checked this article for accuracy. However, things do change, so please do your own research.


Francis Hui

Key Takeaways

  • Essential retirement planning steps include setting clear goals, understanding your income, assessing your risk tolerance, and considering various investment and saving options.
  • Effective retirement planning involves setting realistic goals, regularly reviewing your financial situation, diversifying your investments, and considering tax-efficient options like Individual Savings Accounts (ISAs) or pensions.
  • For secure planning, it's important to diversify your investment portfolio, have a clear understanding of your income and expenses, and consider potential healthcare costs.
  • After age 65, crucial steps include reviewing your pension options, considering equity release for an additional income stream, and planning for potential long-term care expenses.
  • Common missteps include not starting early enough, underestimating living expenses, ignoring the impact of inflation, and not considering healthcare costs in later life.

Few people like the idea of sitting down and working out whether they will be able to afford to retire, but understanding both the benefits and risks associated with a few basic retirement planning steps could help you make the process a breeze.

After all, you do not want any nasty surprises once you have stopped earning an income, especially considering that people in the UK are living longer than ever.

In This Article, You Will Discover:

    Our team at Every Investor has compiled this guide containing the basics of retirement planning, based on common questions we receive.

    At Every Investor, we are committed to maintaining the highest standards of accuracy and comprehensiveness. 

    Our researchers have carefully analysed the latest equity release news, and our editorial team reviews, fact-checks, and updates all our content to ensure it remains current, relevant, and undergoes extensive quality checks.

    This article was researched and written by a team of financial experts, without the use of AI assistance.

    Please note

    This article is intended to be an informational aid only and should not be considered financial advice. Always consult a professional financial advisor before making any retirement planning decisions.

    Keep reading to find out which retirement planning steps you should be following.

    What Are the Essential Retirement Planning Steps for a UK Resident Over 65?

    As experts in retirement planning, we understand the vital steps for UK residents over 65. Firstly, you should carefully assess your financial situation, and consider any state and private pensions, savings, and investments.

    Secondly, it's essential to understand your spending needs in retirement. This includes essential living costs, lifestyle choices, and potential care costs. A comprehensive budget will provide a clear picture of your financial needs.

    In addition to the financial aspect, it's crucial to consider where you want to live in retirement. Whether you plan to stay in your current home, downsize, or relocate, your living situation will significantly impact your expenses. Lastly, don't forget about estate planning.

    This includes setting up a will, considering inheritance tax, and appointing power of attorney if required. Remember, retirement planning at this stage is not just about surviving but thriving.

    Prepare a Retirement Planning Checklist

    Creating a retirement planning checklist can help you stay organised and ensure you cover all essential aspects of retirement planning. 

    There is no point diving in without a plan and getting stuck before you have even started!

    Here are some of the items you should include in your checklist:

    • Set goals. 
    • Estimate income needs. 
    • Review pensions and investments.
    • Seek professional advice.

    These will not be the only items on your checklist, but to find out what the others should be, you will have to do some homework. 

    The steps outlined in this article will help you consolidate your retirement planning checklist so you can start organising your later-life finances with confidence.

    What Are the 5 Best Planning Tips for Retirement?

    The 5 best planning tips for retirement are setting clear goals, determining your financial needs, considering your income options, creating a comprehensive retirement plan, and seeking professional advice to understand potential drawbacks. 

    These tips can be helpful steps to follow when you start planning for a comfortable and secure retirement.

    Let us dive deeper into what these steps entail. 

    Step 1: Set Clear Goals

    Setting clear goals is the first step in retirement planning and involves defining your objectives and desired lifestyle during retirement. 

    It is essential to consider factors such as your target retirement age, the kind of lifestyle you envision, and any potential expenses, such as travel, leisure activities, or supporting family members. 

    Gaining a clear understanding of your retirement goals enables you to develop a tailored financial plan that meets your needs and aspirations.

    Identify a Strategy

    Identify a balanced strategy that will help you pin-point your retirement goals, plan your finances accordingly, and consider both the potential benefits and risks associated with these goals.

    One strategy for doing this involves breaking your planned expenditure into ‘essential’ and ‘non-essential’ categories.1

    Essential expenditure includes things like housing, utility bills, and food, while non-essential expenditure includes things like holidays and entertainment. 

    Use a Budget Planner

    A budget planner can assist you in keeping track of your income and expenses, identifying areas where you can make savings, and establishing manageable financial objectives for retirement. 

    You will be able to find this kind of tool online, or you could simply put together a budget by going through your bank statements and setting up an old-fashioned ledger.

    Highlight all your essential and non-essential expenditure going back a few months, and use this information as a starting point.

    Be SMART

    According to advisors and commentators, employing what is known as the SMART strategy can also be a good place to start.2

    Here is how this approach works:

    • Security: Thinking about security in retirement is all about identifying and managing risk. What would you do, for instance, if you became ill and required ongoing care?
    • Management: Speak to a financial advisor when you start planning for retirement. If you would prefer the DIY approach initially, think about simplifying your finances by consolidating bank and investment accounts so your portfolio is easier to manage. 
    • Activity: Something that is often overlooked is how you are going to remain active after retirement. Will you be pursuing hobbies? Travelling? Depending on your plans, you may have to budget for the activities you would like to prioritise. 
    • Realism: It is incredibly important to be realistic at this stage of your planning. What kind of retirement lifestyle can you anticipate? Would it make sense to delay retirement by a few years to build up more of a pension, or to keep working part-time?
    • Transitioning: Moving from one stage of life to another is, in a sense, the crux of entering retirement. Use this planning step to help you think about your will, your beneficiaries, and whether you should contact an estate-planning expert. 

    While employing this SMART strategy, it is crucial to keep educating yourself on the benefits of different retirement approaches and to keep abreast of developments like changes to pension rules and rates adjustments that could affect your planning. 

    Do not forget

    Whichever strategy you use, it is very important to factor in inflation and account for any large, one-time expenses, such as paying off a mortgage, starting a business, or funding a child's education. 

    In addition, consider any potential risks, such as health issues or economic downturns, and ensure your goals are flexible enough to adapt to changing circumstances. 

    Regularly reviewing and updating your goals is vital to ensure they remain aligned with your current situation and future expectations, ultimately leading to a comfortable and secure retirement.

    Step 2: Determine Your Retirement Income Needs

    To determine your retirement income needs, first estimate your life expectancy and the number of years you expect to be in retirement. 

    Then, multiply your desired annual income by the number of years in retirement, adjusting for inflation. 

    How Much Income Do You Need in Retirement?

    How much income you need in retirement will depend on your desired lifestyle, living expenses, and any unexpected costs that may arise. 

    A general guideline is to aim for a retirement income of about 70% of your pre-retirement salary3, but individual circumstances may vary. 

    Take into account factors such as housing costs, healthcare, travel, and leisure activities to estimate your ideal retirement income.

    When Will You Retire?

    Deciding when to retire is a personal choice that depends on factors such as your financial situation, health, and lifestyle preferences. 

    Some people may want to retire as soon as possible to start travelling and spend more time with their family, while others may prefer to work for longer because they enjoy their career.

    Step 3: Assess Your Financial Situation and Income Options

    Assessing your financial situation and income options involves reviewing your current savings, investments, and pension contributions. 

    Consider all income sources, such as the State Pension, workplace pensions, personal pensions, and investments. 

    The UK government’s Money Advice Service, MoneyHelper, provides a useful pension calculator that takes into account your current pension contributions, age, and retirement goals to estimate your pension income.

    If your savings and pension will not meet your retirement income needs, explore options such as increasing pension contributions, investing in additional income-generating assets, or working part-time during retirement.

    How Much Pension Will You Receive?

    To determine how much pension you will receive, consider the State Pension, workplace pensions, and any personal pensions. 

    Check your pension statements and the government's State Pension forecast tool to estimate your pension income.


    Assets such as property, collectibles, or shares can be sold to generate additional retirement income. 

    Consider the potential tax implications and any impact on your lifestyle before deciding to sell assets.

    Do You Have Other Income?

    Other income sources, such as rental income, part-time work, or annuities, can supplement your pension and investment income during retirement. 

    Identify these sources and estimate their contribution to your overall retirement income.

    If you are considering doing part-time work during retirement, try to find something you enjoy doing that can generate an income.

    Do You Have Home Equity?

    Home equity could help you boost your retirement income through downsizing or equity release schemes.

    You could get an equity release loan against your property and cash out a tax-free lump sum, or take occasional smaller withdrawals.

    Review Your Other Income Sources and Assets 

    Regularly review your other income sources and assets to ensure they align with your retirement goals. 

    This could entail revising your financial plan, making adjustments to your spending, or looking for additional sources of income.

    If you own an investment property that generates an income for you, you could continue to receive the monthly rental, or decide to sell the property instead and invest the proceeds.

    If you own another property, such as a holiday home, you could consider leasing it out.

    Consider Your Investment Options

    Investment options such as stocks, bonds, and property can provide additional income and capital growth during retirement. 

    Consider diversifying your portfolio across various asset classes and sectors to spread risk and work towards long-term financial objectives.

    Do not forget

    It is important to understand associated risks and potential downsides of investing during retirement: Investing always carries risks, and the value of your investments can go up or down. 

    Calculate After-Tax Rate of Investment Returns

    Calculate your after-tax rate of investment returns in order to estimate your actual retirement income. 

    Factor in the current rates for capital gains tax, dividend tax, and any applicable allowances when making these calculations, and be aware that tax rates and allowances may change in the future.

    Do not forget

    Actual investment results may be affected by things like how the market is doing and your own personal situation.

    Assess Risk Tolerance vs Investment Goals

    Balancing risk tolerance and investment goals is crucial to achieving your retirement objectives. 

    Evaluate your comfort with risk by considering factors such as your investment horizon, financial goals, and personal circumstances, and adjust your investment strategy accordingly to align with your long-term goals.

    Stay On Top of Your Financial Projections

    Review and update your financial projections on a regular basis to account for changes in your life, the market, and how your investments are doing.  

    This will help keep you on track with your plans for retirement.

    Step 4: Make a Retirement Plan

    Make a retirement plan by listing your financial goals and how to achieve them. 

    Include a timeline for meeting these goals, as well as any adjustments to spending, savings, and investment strategies. 

    To factor in changes in your financial situation, market conditions, and personal circumstances, regularly review and update your plan.

    Answering the following questions may help you when setting up your plan: 

    When Can You Retire?

    Determining when you can retire involves assessing your financial readiness and ensuring you have sufficient income and assets to support your desired lifestyle. 

    Review your retirement plan on a regular basis and make any necessary changes.

    How Will You Retire?

    Consider how you will retire, such as gradually reducing your work hours or fully retiring at a specific age. 

    When making this decision, think about your personal situation, your finances, and how you woould like to live.

    Will You Have Any Income Gaps?

    Identify any income gaps during retirement, such as unexpected expenses or periods of reduced income, and create a contingency plan to address these situations.

    One way to avoid gaps in income is to try and pay off as many debts as you can while you are still working. 

    If you are anticipating gaps in your income at the planning stage, you could consider retiring later to continue increasing your nest egg.

    If you think you will need a lump sum to cover a large expense, you could potentially withdraw from your pension.

    Always speak to a qualified financial or pensions advisor before making a withdrawal from your pension. 

    How Much Tax Will You Have to Pay in Retirement?

    In retirement, you may still be subject to income tax, capital gains tax, and inheritance tax.4 

    Your tax liabilities will depend on your income sources, such as pensions, investments, and property. 

    Use HMRC's tax calculators and seek professional advice to estimate your tax obligations in retirement.

    Step 5: Whom to Talk to About Retirement Planning

    When discussing retirement planning, it is important to seek advice from professionals such as financial advisers, pension specialists, or independent financial advisers. 

    They can help you look at your current finances, figure out what your options are, and make a plan for retirement that fits your needs. 

    Ensure that any adviser you speak to is regulated by the Financial Conduct Authority (FCA) to guarantee the quality of their advice.

    Speak to a Retirement Advisor

    A retirement advisor can provide expert guidance on your retirement planning, including assessing your financial situation, setting goals, and recommending investment strategies. 

    Ensure the advisor you choose is regulated by the Financial Conduct Authority (FCA) to guarantee the quality of their advice.

    Consult an Equity Release Broker or Advisor

    If you are considering using home equity to boost your retirement income, consult an equity release broker or advisor. 

    They can help you explore your options, understand the risks, and identify the most suitable equity release scheme for your circumstances.

    Chat With Your Family

    Discussing your retirement plans with your family can provide valuable support and insight. 

    They may offer suggestions, raise concerns, or help you identify additional resources to achieve your retirement goals.

    Finalise Your Choice

    After considering all aspects of your retirement planning, finalise your choice by consolidating your financial objectives, adjusting your investment strategy, and regularly reviewing your progress. 

    This will help keep you on track to a potentially comfortable and secure retirement.


    When planning for retirement, it is vital to assess and manage the risks associated with your investments and other financial decisions. 

    Diversify your investment portfolio, maintain an emergency fund, and consider insurance products to protect against unforeseen circumstances.

    What Are the Benefits of Retirement Planning?

    The benefits of retirement planning include financial security, peace of mind, and the ability to maintain your desired lifestyle during retirement. 

    By proactively planning for retirement, you can: 

    • minimise financial stress 
    • avoid potential pitfalls 
    • make informed decisions that help you achieve your long-term goals

    Understand that your actual results could be different depending on your specific situation and the market environment.

    The benefits of retirement planning must be balanced with an understanding of potential risks and challenges during retirement, but do not delay when it comes to looking at your later-life needs and options.

    Common Questions

    When Should I Start Planning for Retirement?

    How Much Money Will I Need for Retirement?

    How Can I Estimate My State Pension?

    What Is the Difference Between a Defined Benefit and a Defined Contribution Pension?

    Can I Take a Tax-Free Lump Sum From My Pension?

    How Do I Consolidate My Pension Pots?

    What Is the Impact of Inflation on My Retirement Income?

    How Can I Find a Reliable Retirement Financial Advisor?

    Can I Continue to Work After Reaching the State Pension Age?

    What Is an Annuity and How Does It Work?

    What is a SIPP?

    How Do I Decide When to Retire?

    How Do I Select My Retirement Investments?

    When Should I Start Retirement Planning?

    Is Planning for Retirement in Your 50s Too Late?

    How Do You Plan for Retirement When You are in Your 60s?

    How Can You Increase Your Pension?

    Should I Use Equity Release to Boost My Pension?

    What Financial Support Can UK Retirees Receive?

    What Are the Essential Retirement Planning Steps?

    How Can I Effectively Plan My Retirement?

    What Steps Should I Take for Secure Retirement Planning?

    Which Retirement Planning Steps Are Crucial After Age 65?

    What Are Common Missteps in Retirement Planning?

    In Conclusion

    Planning for retirement involves setting clear goals, determining your financial needs, considering your income options, creating a comprehensive plan, and seeking professional advice. 

    You could be on your way to a potentially comfortable and secure retirement by adhering to these guidelines and periodically reviewing your plan.

    Once you know how much income you need during retirement, and how much you can potentially generate, it is much easier to plan for the future, so be sure to follow these retirement planning steps.

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