How to prepare and plan for retirement

The earliest you can usually take money from a pension is age 55 (57 from April 2028), so it’s all about saving as much as you can in your younger years – and for as long as possible.

Starting a pension early means you’re likely to build up more money for your retirement, but you can start a pension at any age.  

If you’re employed, you can join your employer’s workplace pension. One should be set up for you if you’re 22 or older and earn over £10,000 a year, otherwise you’ll usually need to ask to join.  

Your employer will also pay in extra money if you earn at least £6,240 a year, called an employer contribution. They might also contribute if you earn less than £6,240 a year, but they don’t have to. 

If you don’t have an employer, or want a separate pension, you can choose your own pension provider.

The way your pension works and the actions you might need to take depends on the type you have.  The two main types of pension are: 

• Defined contribution – these pensions pay you an amount based on how much is paid in and how well the invested money performs. 
• Defined benefit (also called final salary and career average schemes) – these pensions pay you a guaranteed amount, usually based on your salary and how long you’re a member.

You can use our tool to find out your pension type or ask your provider.  

Defined benefit pensions are typically only offered to new members in the public sector, like the NHS, Armed Forces and education. Most other employers, or if you set up your pension yourself, will offer defined contribution pensions.  

If you have a defined contribution pension, you usually need to pay in a minimum of: 

• 5% of your wages if your employer set up your pension or 
• a monthly minimum amount if you set it up yourself – like £100.  

But you’ll typically need to save more than this for a comfortable retirement.  

Our Pension calculator can show your estimated retirement income based on different amounts, including how much retirement income you might need.   

If you have an employer, check if they offer contribution matching. This means they'll pay in more if you do. Our Workplace pension contribution calculator can work out how much you could get. 

If you have a defined benefit pension, you’ll often have a set contribution amount based on your salary. To pay in more than this, you'll need to check if your scheme lets you build up extra benefits. If it doesn't, you'll need to start your own defined contribution pension for any additional savings. 

Regularly check your pensions to: 

• check how much you’re on track to get and 
• make sure the correct amounts are being paid in. 

You can check your State Pension forecastOpens in a new window on GOV.UK to see how much State Pension you’re on track to get and potential ways to boost it.  

For your other pensions, you can usually log in to your provider’s online account or check statements you’ve been sent. We’ve step-by-step help if your employer fails to pay into your pension. 

If you have a defined contribution pension, periodically check if you can afford to increase your pension contributions. For example, every six months or after a pay rise.  

Our free and easy-to-use Budget planner can help you see how much spare money you have. 

If you move jobs or set up different pensions, you might end up with a few pension schemes. It might seem sensible to bring them together, but you might lose out on certain benefits if you do. 

Always check if you’d be better off before transferring and consider financial advice – you usually have to get advice to transfer a defined benefit pension worth over £30,000.  

For more help, see our guide about UK pension transfers. 

You’re likely to be many years away from retirement when you reach 50, but it’s a good milestone to start planning how you’d like to take your pension – and if you’re on track for the income you’d like.  

There are three key ages you need to know.

The earliest you can usually access any of your pension is age 55 (57 from April 2028), unless you're retiring early due to ill-health or your pension scheme rules list a lower protected pension age.  

The age your provider expects you to start taking your pension, unless you’ve told them a different date – called a selected retirement date (SRD). You can find your NPA in your scheme documents. It's usually ten years later than the NMPA. 

Your estimated retirement income is usually based on you taking your pension at the NPA or SRD. 

To find out when you can claim the State Pension, check your State Pension ageOpens in a new window on GOV.UK. 

You can check your State Pension forecastOpens in a new window on GOV.UK to see how much you’re on track to get and potential ways to boost it. See our State Pension guides for more information.   

For personal and workplace pensions, log in to your pension provider’s online account or check recent statements. You can usually see: 

• how much your pension is currently worth 
• how much your pension is estimated to pay at your normal pension age. 

Our Pension calculator will help you work out how much you might need for a comfortable retirement and if your current savings are on track to provide this.  

If you have a defined contribution pension, the amount you’ll actually get depends on: 

• how much you continue to pay in 
• how the investments perform  
• the charges you pay and 
• how and when you choose to take the money.  

If you have a defined benefit pension, the actual amount usually depends on your salary, how long you continue working for your employer and any annual increases your provider might apply.  

You can usually take up to 25% of your pension as a tax-free lump sum, as long as the total amount from all your schemes isn’t more than the lump sum allowance (LSA). The LSA is £268,275 for most. 

If you have a defined benefit pension, the rest will be taxable income. Taking a tax-free lump sum might reduce the income you’ll get, but it depends on your scheme. You usually have to take the tax-free lump sum at the same time as starting to take an income.   

If you have a defined contribution pension, you usually have a number of different options:  

• use pension drawdown, where you leave the rest invested and take taxable income as and when you need it 
• get a taxable guaranteed income by buying an annuity 
• take one or more lump sums, with up to 25% of each amount paid tax-free instead of getting the 25% tax-free upfront.   

For more information, see our full guide about your pension options, including how each payment might be taxed.   

If you’re aged 50 or over, you can also have a free Pension Wise appointment to understand the different ways you’re able to take money from your pension pot.  

Many defined contribution pension providers will make investment choices based on your normal pension age or your selected retirement date. This is the age they expect you to retire.  

They also assume you’ll take all your pension money out when you retire, so none is left invested. For example, you might take a tax-free lump sum and use the rest to get an income for life (an annuity). 

This usually means fewer risks are taken with your money the closer you get to retirement, as there’s less time to recover any investment losses. For example, your money might be moved to investments that are generally considered more stable, like government bonds and cash. 

But you might want to consider a different way to invest your money if you’re planning to:  

• retire earlier or later than your scheme’s normal pension age 
• take a flexible retirement income – where you access some of your money and leave the rest invested until you want to take it out (known as pension drawdown). 

It’s a good idea to look at all your finances and how you might plan to: 

• pay off any debts before you retire, including your mortgage 
• make or update your will 
• update your expression of wish form, to tell your pension provider who you’d like to inherit your pension or death benefits. 

The earliest you can usually start taking money from your pension is age 55 (57 from April 2028), but it’s normally up to you when you take it.  

You might not need to take it all at once. For example, if you have a defined contribution pension, you could take a tax-free lump sum at age 55 and leave the rest until you want to take an income. You could also leave it untouched and continue paying in, so it should grow by the time you need it. 

If you take a defined benefit pension before the scheme’s normal retirement date, it’s likely to be reduced as it might pay out for longer than originally planned. 

For more information, see our guides and tools about taking your pension.

Deciding when to take your pension and when to retire often depends on how much money you’ll have to live on. 

Our Pension calculator can work out how much income you’re likely to get, based on the current value of your pensions and your contributions.  

You can also use our Budget planner to calculate how much money you might need to cover your costs. The Retirement Living Standards lists how much income you might need each yearOpens in a new window for a comfortable retirement.  

If your pension is unlikely to give you enough, use our Benefits calculator to see if you’re eligible for any payments. You might also need to retire later or make other changes to your retirement plans. 

Pension income (including the State Pension) is usually added to your other earnings to work out how much Income Tax you’ll pay. If you have other sources of income, this might push you into a higher tax band. 

Deciding when and how to take your pension can be difficult, so it’s worth considering paying for financial advice

If you’re aged 50 or over with a defined contribution pension, you can have a Pension Wise appointment for free guidance on your options – even if you’ve had an appointment before.  

You should receive a letter around four months before you reach your State Pension ageOpens in a new window with an invitation code. You can then use this to apply online or by phone. 

See How to claim your State Pension for more information.  

You can also decide to delay your claim – you might get more if you do. For more information, see our guide Increase your State Pension by deferring your claim. 

Your income is likely to change after you retire, so it’s a good time to check for ways to make your money go further.  

You can use our: 

• Budget planner to compare your costs to your new income – and spot ways to cut back.   
• Benefits calculator to see if you’re entitled to claim extra support, including Pension Credit. 
• How to save money on household bills guide. 

If you’re not receiving a guaranteed income for life from your pension, regularly check how much you have left in your pension pot. It might be worth paying a financial adviser to help you do this. 

It’s also a good idea to plan for potential health changes as you get older. For example, you could: 

• set up a power of attorney – so someone you trust can manage your health and finances if you’re unable to 
• plan how you might pay for long-term care 
• update your will and pension nomination forms with your wishes for your money after you die. 

Your pension might be the largest amount of savings you’ll ever have, so paying for financial advice to protect or grow it is worth considering.  

A financial adviser can recommend ways to boost your pension and give you personalised advice on: 

• what to invest in 
• how to pay less tax 
• if you should transfer or combine your pensions. 

Our tool can help you find a retirement adviser or see our guide Choosing a financial adviser for more information.