Preparing For Retirement Emotionally, and Financially

Our Chartered Financial Planner, Leonard Birnie shares his expertise on preparing for your retirement. In this second blog of the series, Leonard shares the things you need to consider to prepare for retirement, both emotionally and financially.

A lot of our clients speak to us years in advance about their retirement aspirations and when they would like to retire, stating things like ‘I’ve worked 30 years, I’m ready to move onto the next chapter.’

Whilst the above is a common thought process and clients often like to stick a flag in the ground at 30 years of working for example, as Financial Planners we have to ensure that clients are retiring for the right reasons.

Some of our clients have worked for their entire lives and a lot of their personal identities are inseparable from their professional lives. Before retirement is officially taken, we often ask clients to consider and personally challenge themselves using the below criteria.

Senior couple preparing for retirement

1. Preparing emotionally for retirement

In my experience, clients can really struggle with the emotional crisis of not structuring their day around, in most cases, a 9am – 5pm mindset. It is difficult to wake up on the first day of official retirement and not feel like something is missing. We often here statements such as:

‘Retirement isn’t what I thought it would be.’

‘I’m very quickly running out of things to do.’

‘I miss speaking to my colleagues.’

As part of our discussion with clients we will often discuss the above in detail and we encourage the following:

What motivates you? – Have a clear idea of what motivates you to get out of bed in the morning and what you will enjoy spending most of your time doing. For some clients this is seeing their grandchildren grow, for others it is touring the world best golf courses. People are different; figure out what makes you unique.

Consider going part-time – Missing colleagues and your work environment can be natural. Ask and negotiate with your employer if you can work less or flexibly. In today’s current environment, this is becoming the new normal. Social interaction is important to anyone considering retirement and perhaps a big part of your social sphere might be your work colleague/friends, so you do not have to give up this interaction.

Structure your day regardless of what your time is filled with – Structure dictates our lives from the day we get our first part-time job to our last day in the office. Ensure that you have activities/hobbies booked in and have the costs set aside.

2. Preparing financially for retirement

You can read my previous blog on my five key steps for preparing for retirement.

Here are some further practical tips for those a few months from retirement:

Send off any forms needed to secure guaranteed benefits – A lot of individuals have either local government pensions, NHS pensions or private final salary pensions. Given the current global health crisis, the administering bodies of these pensions are under severe strain with decreased staffing levels.

If you have any pensions you wish to claim send your forms to claim these benefits a few months in advance.

Consider your income position – When you retire you may be part way through a tax year and have received income from your employer. Consider the effect this will have from a taxation perspective on when you draw from your retirement pots and the fact that you will likely have tax to pay.

For clarification on this, speak to a professional, either your tax adviser or financial adviser who will be glad to assist you with this and could have a solution to save you money.

Your tax-free lump sum – This single biggest misconception I hear from clients is that when they retire, they have to take their lump sum (25% tax-free cash) from their pension and place it in their bank account.

Not only is this false, but unless you have immediate plans for the lump sum you draw, it can be incredibly detrimental.

Tax-free cash is incredibly valuable as an element of any pension and having a clear plan about what you want to do with yours at retirement is important. The most common outcomes I see are:

Paying down debts – This can be a great option, but realistically with record low interest rates, is your money working the most efficiently it can if you are paying your 2.00% fixed mortgage down when you could utilise the money to seek a return in the markets? This is an option that we would consider based on rates at the time.

Home improvements (future proofing) – A lot of my clients have their ‘forever homes’ and will often spend their tax-free cash making their homes stand the test of time. Another great option just be clear about how much this will cost and whether it is entirely necessary; once the money is gone it’s gone.

Gifts – to mark retirement, clients will often make gift to loved ones, whether it be a gift to a child to get them on the property ladder or paying them their potential inheritance early.

Providing tax-efficient income – You can keep your tax-free cash in the pension and use it each year to provide an element of your yearly income. This is often very tax efficient and can make your money last considerably longer into retirement taking advantage of tax planning.

Tips for retirement planning infographic

Infographic showing 5 practical tips on preparing for retirement

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Contact us

To discuss your retirement options, please contact Leonard Birnie at

This blog is for information purposes only and should not be advice or a recommendation to act. You should always seek independent financial advice before taking any action with your pensions.

Tax advice is not regulated by the Financial Conduct Authority.

MHA Tait Walker Wealth Management is a trading style of Tait Walker Financial Services Ltd which is authorised and regulated by the Financial Conduct Authority. Company Number 5674020. Incorporated in England. Tait Walker LLP trading as MHA Tait Walker is a member of MHA. MHA is an independent member of Baker Tilly International Limited, the members of which are separate and independent legal entities.