10 years from retirement? Your planning checklist

If you’re 10 years from retirement, there’s still time to make a meaningful difference to your lifestyle in later years. We explore what to do now to help set yourself up for a more comfortable retirement.

1. Open a pension if you don’t already have one

If you don’t already have a pension, don’t worry – it’s still worth taking one out.

A personal pension is one of the most tax-efficient ways to save for retirement. This is because you get tax relief on your contributions. For every £80 you save into a pension, the government adds £20, boosting your contribution to £100.

If you’re a higher-rate or additional-rate taxpayer, you can claim back an additional £20 or £25 respectively on your self-assessment tax return.

And that’s not the only great thing about a pension. Money in a pension grows tax-free. You usually only pay tax when you withdraw money from your pension in retirement and have taken your 25% tax-free cash.

2. Track down any lost pensions

It’s surprisingly easy to lose track of old workplace pensions, especially if you’ve changed jobs a few times. If you’re unsure where to start, you can use the government’s tool to find contact details for old providers.

You can then think about whether to bring all your pensions together into one pot.

Consolidating your pensions helps you have a clearer view of all your retirement savings and manage them more easily. You could also lower your costs if you consolidate your pensions with a lower-cost provider. 

It’s important to make sure that transferring your pensions is right for you, as you could miss out on valuable benefits. If you have a defined benefit¹ – or ‘final salary’ – pension, which pays a guaranteed income, transferring is unlikely to be suitable. Check with a financial adviser if you’re not sure.

3. If you’ve already got a pension, check whether you’re on track

Now’s a great time to review your pension savings, as you’ve still got time to act if you need to.

Take a look at:

• how much you’ve saved so far

• how much you’re paying in

• whether you’re likely to meet your retirement goal 

You can use our pension calculator to see how much pension income you could get when you retire, with or without the State Pension.

4. Make a plan for any shortfall

If your savings aren’t quite where you’d like them to be, have a think about your options.

You could consider:

• working a bit longer

• reducing your spending now or when you retire

• downsizing your home or moving somewhere cheaper

There’s no one-size-fits-all solution. The key is having a plan that feels achievable to you.

5. Increase your pension contributions if you can

Even a small increase can go a long way, especially if your employer matches your contributions. For example, with auto-enrolment, many employers pay in 3% of your salary and you pay in 5%².

But if you increase your contributions to, say, 7%, they might also pay in 7%. On a salary of £50,000, this could mean an extra £3,000 a year going into your pension, according to our calculations. 

You could also boost your pension by adding a lump sum of money. For example, if you get a bonus or inheritance, you could put it towards setting yourself up for a more secure financial future. 

Most people can pay up to 100% of their gross (pre-tax) relevant earnings³ into their pension each tax year, up to a maximum of £60,000. This is known as your annual allowance. It covers all your pensions (not the State Pension) and includes employer and third-party contributions, as well as your own personal contributions. 

It may be possible to contribute more than your annual allowance by carrying forward unused annual allowances from the previous three tax years.

6. Understand how your money is invested

As you get closer to retirement, it’s worth reviewing how your pension is invested.

Earlier in life, taking more risk can help your money grow. As you approach retirement, you may want to gradually shift away from riskier assets like shares into less risky ones like bonds⁴ or cash.

But being too cautious could mean your pension doesn’t last as long as you need it to.

Keeping some of your portfolio in shares can help your money keep pace with inflation⁵. The right mix depends on when you plan to retire and your attitude to risk.

7. Learn about your retirement income options

There are several different ways to take your pension money in retirement, and you can’t always switch to another one if you change your mind. So it’s a good idea to start thinking about what might be right for you.

The main ways to access your retirement pension money are:

• Use flexible income drawdown – you decide how much income to withdraw and when. And you can change the amount whenever you want to.

• Take individual lump sums – you take small lump sums when you need them. They’ll be a mix of up to 25% tax-free cash (up to the £268,275 lifetime limit) and 75% taxable income. This is also known as UFPLs or uncrystallised funds pension lump sum.

• Buy an annuity – lifetime annuities pay out a guaranteed income for the rest of your life. Fixed-term annuities pay out a guaranteed income for a set period.

• A mixture of the above – you might want an annuity to cover essential expenses like bills, and use flexible drawdown for discretionary spending, such as holidays, for example.

Each option has its pros and cons, so it’s worth understanding them well before you retire.

8. Start thinking about all your retirement pots

All well as your pension, it’s important to think about other sources of retirement income you may have. Some, like pensions, have tax benefits.

• ISAs – you can withdraw as much money as you like from ISAs without paying tax.

• Savings accounts – if you’re a basic-rate taxpayer, you can earn up to £1,000 of tax-free interest on savings each year, known as the ‘personal savings allowance’. This allowance is £500 for higher-rate taxpayers and £0 for additional-rate taxpayers⁶.

• General account – you can earn tax-free capital gains of up to £3,000 and tax-free dividends of up to £500 for investments in a general account in the current tax year.

The way you draw income from your investment and savings pots could make a big difference to your overall tax bill in retirement. Consider taking income and capital from general accounts before ISAs and pensions. This will preserve the tax wrapper benefits for as long as possible.

While retirement might still seem a long way off, the steps you take now can make a real difference to your future. By understanding where you stand, and taking action where you can, you’ll be in a stronger position to build a more comfortable retirement.

¹ Defined benefit (DB) pensions pay a guaranteed income depending on your final or average salary and are funded by employers. In general, DB pensions are usually not suitable for consolidation.

² The auto-enrolment minimum contribution for the tax year 2026-27 is 8% of your salary between £6,420 and £50,270. The 8% comprises 5% from you (including tax relief) and 3% from your employer.

³ For more on what counts as ‘relevant earnings’ that can earn tax relief when used to fund a pension, see the HMRC Pensions Tax Manual.

⁴ Bonds are a type of loan issued by governments or companies, which typically pay a fixed amount of interest and return the capital at the end of the term.

⁵ Inflation is the rise in prices for goods and services over time, meaning your money buys less than it used to.

⁶ Gov.uk – Tax on savings interest

Investment risk information

The value of investments, and the income from them, may fall or rise and investors may get back less than they invested.

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