Retirement is a broad topic and thinking ahead can often evoke a mix of emotions. Even if you’re looking forward to this next chapter, knowing what you want – and the life you want to lead – is often harder to pin down than you might have thought.

Here are three key questions to ask yourself before you retire.  

Do I want to stop all work right away?

The concept of pensions and retirement is an evolving one. While, traditionally, it would signal putting that final full stop to your working life, we now tend to approach retirement from a different perspective. Whether it’s due to financial necessity or simply a desire to keep busy and out of the house, plenty of people choose to continue working in some capacity during retirement. The power to define what retirement means to you lies in your hands, which can take a great deal of fear, uncertainty, and, at times, resentment toward retirement out of the equation. Whether you choose to get a part-time job that keeps you social and active or to simply move into freelance work that can fit around your other plans – for instance, consulting work that puts your decades of experience to good use – your lifestyle will benefit from the additional boost, alongside your pension. 

For some, that can feel too open-ended. Talking things through with a financial advisor is one of the best ways to start making more concrete plans, and understanding what the next chapter will – or could – look like. 

Of course, for you, retirement may mean complete freedom to come and go as you please. There is no obligation to work, provided you have laid the foundations throughout the course of your working life through wise investments and savings, and regular contributions to your pensions. 

The bottom line is that retirement really is what you make of it. If you want to define this next stage of your life as retirement then, whether you maintain some connection to the workplace or not, it will be what you make of it. If you’re feeling nervous about relying solely on your pension, then continuing work part-time or on a flexible contract can make for the perfect transition as you get used to managing your finances differently. At the moment, record numbers of over-50s are working part-time and demonstrating the value of keeping one foot in the door.

What debts would I be taking into retirement, and what debts should I be willing to take into retirement? 

There is no rule stating that you cannot retire until you are debt-free. Plenty of people retire with a small mortgage left on their home, or some credit card debt still to pay off. It’s important to remember that not all debt is created equal and that some are ‘safer’ (or, in the very least, preferable) to bring into retirement than others. 

A small mortgage still outstanding, for instance, provides a little more flexibility if you suddenly need to make costly repairs, whereas credit card debt really doesn’t offer any benefits, particularly if you are ceasing to work. Interest rates are often high and will gnaw away at your pension if left to their own devices.

Even if you have enough to cover your day-to-day expenses, bills, and debt repayments, it’s important to remember that having an emergency fund stashed away is just as important in retirement as it is when you are working. Any good financial plan will make room for building up that extra reserve of cash and not see you stretching your private and state pension thin each month – particularly if that is caused by lingering debts. 

Pension and retirement planning during the years leading up to retirement is just as important as creating a plan for retirement itself. We can help you to ensure your finances are in the healthiest state possible before you’re ready to make this big life change. 

What sort of lifestyle do I want to lead?

This is perhaps the most important – and, for many people, the broadest. While there are plenty out there who already know what they want to do with their years of retirement, whether those plans are for extensive travel, indulging in a favourite hobby, or simply spending more time with family, many of us find it hard to envision what retirement will really look like. 

The good news is, you don’t need to have the specifics nailed down yet – and it’s perfectly fine for your main plan to be something as simple as making the most of all that extra free time. It is, however, very important that you have some idea of the sort of budget you’ll want to work with. 

If you want to stay active, prioritise travel and use your retirement to take on new experiences, then there’s a good chance you’ll need a more robust budget than someone who would rather stay closer to home without so many day-to-day expenses. If you can work out where you stand on that spectrum, then you’ll be on a much stronger footing when you do retire. 

Remember that not every day has to meet a specific sum. Some days or months will simply cost more than others, but the key is to ensure you have the right amount of wiggle room based on what you want to build your retirement around. 

Risk Warning: The value of your investment can go down as well as up and you may not get back the full amount you invested.