One of the key periods when planning is essential is in the five years or so before retirement.
There are three main things you need to do – and a number of subsidiary things.

1. It may seem really obvious but you should be taking this opportunity to set aside as much money into whatever pension scheme you are already paying money into. 

2. You should be anticipating possible large items of expenditure that will need to be carried out and paying for them now, while you still have some spare cash. For example, any major repairs to your house, buying a new car, either now or immediately before you stop work. 

3. You should also check your pension fund to make sure that it is safe and on target.
This last point is one of the things many people forget. Yet the consequence of not doing so can be painful.

Lifetime Option

Many pension plans may have a sizable exposure to investment in shares which can continue right up until the fund matures and income is needed from it.
Lifetime option
Yet commonsense suggests that if the stock market were to suffer a sudden correction in the final two or three years before you retire, the value of your pension pot – and thus the income you’ll get from it in retirement - could suffer.
If appropriate to your situation, one solution is to gradually shift your pension pot into less risky investments in the final few years before you retire. 

The majority of money purchase company schemes do this already – it is a process usually called the “lifetime option”. In essence, the fund switches from shares into gilts and bonds so that by the time you stop work almost all of it is more secure.
This usually takes place at a rate of about 20% a year in the five years before retirement.
However, the disadvantage of this scheme could be that if shares race ahead in the final few years you may miss some of those gains. But they may be worth missing for the comfort of knowing that what you have already is being safeguarded.
If you are in a company pension scheme, you can find out if this is happening to your money and if not, ask for the money to be switched on your behalf. Most company pension schemes will offer several funds, including a low-risk one, so you can simply do this at every anniversary in the five years before you retire.
If you have a personal pension, the same principle applies. You can either switch at low cost into a lower-risk fund offered by the fund management company (subject to performance being acceptable).
Or, as long as the transfer costs are not too high, move part of your money into another low-risk fund offered by another manager.
Other things you should be doing
There are other subsidiary issues you should be considering too, especially as you come very close to retirement.

Other things you should be doing

1. The first is inheritance tax planning and wills, especially what happens to your pension pot in the event of your death. 
2. The second is to look at your own health. This will determine what kind of annuity you decide to take – whether it should be index-linked (you assume you will be living a long while after retirement) or not, for instance. Also, how much your spouse should receive in the event of your death and whether this money should be guaranteed for a set number of years.
Either way, you should not take the run-in to retirement for granted. Even if you are saving more money than before, that may not be enough to guarantee a comfortable retirement. 

We can help you fill in any gaps. Please e-mail or contact to discuss your options. 

Levels and bases of, and reliefs from, taxation are subject to change