Why it’s important

You’ve spent decades building your savings. The last few years before retirement are your final pit-stop — the moment to fix any gaps, reduce risk, and make sure your income will last.

Think of this as your five-point pre-retirement checklist.

What you need to know

1️⃣ Know what you’ll spend — and what you’ll need

Most people plan retirement backwards: they look at their savings, then wonder if it’s enough.
Flip that around.
Start with what you’ll spend.

• List essential costs — housing, food, energy, insurance, council tax.
• Add lifestyle costs — holidays, hobbies, gifts.
• Don’t forget one-offs — new cars, home repairs, helping children.

Many retirees find they spend 60-80% of their pre-retirement income once commuting and work costs vanish.
Use that as a sense-check, then see if your projected pension income covers it. If not, you’ve time to close the gap.

2️⃣ Check your State Pension — and plug any gap

Your State Pension is the foundation of most retirements.
To get the full new rate (about £230 a week), you need 35 qualifying years of National Insurance (NI) contributions.
Do this now, not at 65.

• Go to gov.uk/check-state-pension for your forecast.
• Review your NI record for missing years.
• If you have gaps, you can often buy voluntary Class 3 NI contributions to fill them.

A single missing year can cost roughly £824 to buy but add over £275 a year to your pension for life — a brilliant return.
Martin Lewis calls this “one of the best investments you can make.”

3️⃣ Tidy your pensions — consolidate and update

Over a career, you may collect several small workplace pensions. Each has fees, statements, and sometimes forgotten funds.

• List every scheme — use the government’s free Pension Tracing Service if needed.
• Compare charges and investment performance. High fees quietly eat into growth.
• Consider consolidation into one modern, low-cost plan — it’s easier to manage and usually cheaper (check for guarantees before moving).
• Update your “expression of wish” form so the right people inherit your pension if you die.

This admin job sounds dull, but it can boost efficiency and peace of mind instantly.

4️⃣ Pay off expensive debts

Retiring with high-interest debt is like trying to sail with an anchor still down.
Focus first on credit cards, personal loans, and car finance. Their interest rates (15–25%) dwarf the growth from most investments.

• Clear or reduce them while you still have income.
• For mortgages, compare your rate with likely investment returns.
  • If you’re on a high variable rate, paying it off may beat investing.
  • If you’re on a cheap fixed deal, you might prioritise pension contributions for the tax relief.
    Either way, aim to reach retirement with manageable or no debt. Freedom from monthly payments makes your budget far more flexible.

5️⃣ Re-check your investments and risk level

You’re moving from wealth-building to wealth-preserving.
That doesn’t mean going all-cash — inflation will erode it — but it’s time to review your mix.
Typical steps:

• Gradually shift some equity exposure into bonds or diversified funds for future cash needs.
• Keep at least 12–24 months of spending in cash so you’re not forced to sell investments after a market drop.
• Check fund fees; even a 1% difference can cost tens of thousands over 20 years.
• Ensure your portfolio matches your retirement goals — income focus, growth, or balance.

If unsure, a session with an independent financial adviser or the free Pension Wise guidance service can help you set the right path.

What you should do next

✅ Build your retirement budget
Use your actual spending data or a simple spreadsheet. Include inflation (3–4% a year). This tells you the income you’ll need.

✅ Get a pension forecast and combine the numbers
Add together:

• State Pension forecast
• Workplace and personal pension estimates
• Any ISA or investment income
  You’ll instantly see if you’re short or on track.

✅ Top up smartly
If you’re behind, consider increasing contributions in your final working years. Every £1 added to your pension now still gets tax relief — and could benefit from a decade or more of growth.

✅ Eliminate or reduce debts
Create a repayment plan and prioritise anything above 6–7% interest. Once cleared, redirect those payments into savings instead.

✅ Plan the transition
Retirement doesn’t have to be an on/off switch. Many people phase out of work — part-time hours or consultancy — which eases both finances and lifestyle. Explore flexible retirement options with your employer.

✅ Sort the paperwork
Update wills, power-of-attorney, and beneficiary details. It’s admin, not glamour, but it protects your family and stops delays later.

Worked example

Mark, 58, earns £45,000 and hopes to retire at 65. He checks his State Pension forecast: 32 qualifying years — short by 3. He pays to fill them (£2,400 total). That boosts his pension by about £825 a year for life — a fantastic deal.

He increases workplace contributions from 6% to 8% for the next 7 years. With employer matching and tax relief, that adds roughly £30,000 extra to his pot.

Finally, he pays off a £5,000 loan charging 11%. The interest saved equals an instant, risk-free return.

One afternoon’s admin = decades of benefit.

Bottom line

The years before retirement are your final tuning stage — small moves now bring big results later.
1️⃣ Know your spending and income.
2️⃣ Secure your full State Pension.
3️⃣ Streamline pensions and cut fees.
4️⃣ Clear expensive debt.
5️⃣ Dial your investment risk to match your horizon.

Do these five things, which will make a difference.