Your practical checklist for retiring successfully in 2025

Retirement is one of life’s most significant milestones, along with earlier life events like getting married and welcoming children into your family.

If you have set retirement in your sights for 2025, it’s likely you are already mentally preparing to enter this new chapter. But without thorough planning, you might find you’re underprepared from a practical and financial perspective.

In this article, you will read about:

• Financial tasks to tick off now if you want to retire successfully in 2025
• Practical tips for getting your ducks in a row ahead of this milestone
• How a Kellands financial planner might be able to help you.

Continue reading for all this and more.

1. Set goals for your retirement

American pastor, Harry Emerson Fosdick, once said: “Don’t simply retire from something; have something to retire to.”

These wise words might prompt you to think about your actual goals for retirement. You know you want to finish working and start a new chapter – but what, specifically, do you want to do when that new chapter starts?

Indeed, although you might be excited to retire, some retirees find the decreased socialisation and having lots of free time quite challenging. This could be true for you, especially if you have worked all your life as an executive or business owner.

The good news is, setting measurable goals for your retirement could dissipate these feelings. You could start by:

• Making a list of countries you’ve always wanted to visit
• Noting down hobbies you are interested in trying
• Setting learning goals, such as practising a new language
• Looking into volunteering for causes you care about.

These goals might inform your choices during the preparation stage and give you a true sense of purpose once you stop working.

2. Talk to your employer, colleagues, and clients about your plans

Another practical way to ready yourself for retirement in 2025 is to talk to your employer, colleagues, and clients about your time frame.

Telling your employer far in advance might make the transition into retirement smoother, giving them plenty of time to recruit or promote your replacement. Plus, if you’re making your final few pension contributions in the lead up to your retirement, your employer might decide to match your contributions during this “home stretch” if they aren’t doing so already.

Or, if you’re self-employed, you might consider warning business investors, clients, and other stakeholders about your plans now, rather than surprising them with the news later.

Not only might this make financial sense, but you could enjoy discussing your future plans with work colleagues – they might even be able to suggest amazing travel experiences to put on your bucket list!

3. Review your investments and pensions

On the financial side of things, there’s plenty to cover before you put your feet up and relax into retirement.

First and foremost, if you’re going to stop earning in 2025, now is the time to review your pensions and investments. Take the time to gather statements from all the relevant providers, collating this information and working out the size of your retirement fund (we’ll talk about other sources of income in the next few sections).

This is helpful for a few reasons:

• If your fund falls short of your expectations, you can adjust your plan within plenty of time.
• You can begin to work out how much tax you might pay when you start decumulating (more on this later).
• You might decide to invest more wealth tax-efficiently in the lead up to your retirement – Canada Life reports 17% of retirees wish they’d put more into their pension while they were working.
• Where investment risk is concerned, you’ll have time to start “de-risking” your pensions and wider investment portfolio if this is part of your retirement strategy. We’ve previously talked about the pros and cons of doing so in a detailed blog.

Along with looking at the wealth you’ve already accumulated, when reviewing your pensions and investments it may also be helpful to cast your mind ahead to the coming years. You could still be planning to save and invest money once you stop working – ask yourself how your strategy might change compared to during your career.

4. Boost your State Pension eligibility before 6 April 2025

Even if you’re retiring ahead of State Pension Age – 66 as of the 2024/25 tax year – it’s still vitally important to review your forecast before 6 April 2025. In doing so, you could boost the amount you’re eligible for, increasing your State Pension payments for life once you start receiving them.

In order to qualify for the full, new State Pension, you need to have reached State Pension Age after 6 April 2016. You also need 35 “qualifying years” on your National Insurance (NI) record. These years signify that you have worked and paid National Insurance contributions (NICs) or the equivalent credit.

If you have fewer than 35 qualifying years but more than 10, you’ll still be eligible for the State Pension on a reduced rate.

If you’re short on qualifying years, the good news is that you can buy voluntary NICs to fill gaps in your NI record.

Before 6 April 2025, you can buy voluntary NICs to fill gaps as far back as 2006 – but after this deadline, you’ll only be able to do so for the previous six tax years. A short-term cost today could increase your lifelong payments.

You might be behind on qualifying years if you worked abroad, took time off to raise children, or were out of work due to an illness or injury, to name but a few examples.

You might be thinking: “The State Pension isn’t such a big deal – I won’t bother looking into that.”

But the truth is, even if you’re a wealthy individual with plenty of assets, the State Pension could still form an essential part of your retirement income. In the 2025/26 tax year, the full new State Pension is rising to £230.25 a week – nearly £12,000 a year.

So, make sure you look at your State Pension forecast and consider topping up your NICs if you’re retiring in 2025, even if you haven’t reached State Pension Age just yet.

5. Account for additional sources of income

Along with your pensions, investments, cash savings, and the State Pension, you might have additional sources of income you’re planning to rely on once you retire.

These could include:

• Properties you own. If you have a buy-to-let portfolio, you may be relying on this income to supplement your retirement fund. Consider how the value of your property may rise over time, the amount you could receive from tenants, as well as the potential risks of losing this income due to unforeseen circumstances. You can read our in-depth blog about the buy-to-let landscape on our news page.
• Inheritance from family. Losing a family member can be a tremendously difficult event. One thing your loved one may have left behind is a nest egg of wealth for you to enjoy. You might either be relying on this arriving in future or have already received it.
• Income from a business. If you run a business and plan to continue doing so in retirement, or own shares in a business that pay an annual income, these may both contribute to your retirement fund.

Now is the time to weigh up how much you might earn from these sources, in what form they will arrive, and whether you can reliably depend on them for a sustained period. All this will help to inform your wealth choices ahead of, and during, retirement.

6. Prepare for your tax bill to change

Tax in retirement has been a subject you might have seen covered in the news recently. A 2024 freedom of information request from Quilter revealed that HMRC predicts 1 in 5 retirees to be paying higher- or additional-rate Income Tax by 2027.

That’s because certain tax thresholds have remained frozen for some time, including the Income Tax Personal Allowance and the basic- and higher-rate Income Tax thresholds.

Others have been lessened in recent years, like the additional-rate Income Tax threshold, which was decreased from £150,000 to £125,140 in April 2023.

In addition to Income Tax, other forms of tax could have an impact on your retirement income.

In the Autumn Budget, chancellor Rachel Reeves announced that Capital Gains Tax (CGT) rates for non-property assets would rise in line with property rates with immediate effect. CGT is typically paid on the gains you make from certain assets, including second homes, business shares, and non-ISA shares.

These changes, combined with the reduced CGT Annual Exempt Amount (which fell from £12,300 to just £3,000 between 2022 and 2024), could mean you pay more CGT in retirement than you’d anticipated.

You can read our full breakdown of the changes to CGT here, or speak to your financial planner.

Plus, the tax-efficient Dividend Allowance has also fallen between 2022 and 2024, this time from £2,000 to £500, leading dividend earners to pay Dividend Tax on a larger portion of their earnings.

Across the board, the tightening of several UK tax regimes in recent years means that you could pay several types of tax as a retiree. Assessing how much tax you might pay now, rather than being surprised by a bill next year, might help you plan for this next chapter with precision.

7. Work with a financial planner

The importance of planning ahead cannot be understated when it comes to retirement.

Once you access your pension, for example, the decisions you make could have a serious impact on the amount of tax you pay. Plus, if you’re drawing an income from several sources, you could inadvertently push yourself into a higher Income Tax bracket – and pay the price.

Ultimately, retirement is about enjoying your life and putting yourself first. Financial planning services from an independent professional could put your mind at ease and set you on course for a retirement that puts peace of mind as a priority.

Email us at hale@kelland.co.uk, or call 0161 929 8838.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate tax planning.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts. 

Workplace pensions are regulated by The Pension Regulator.

Your pension income could also be affected by the interest rates at the time you take your benefits. The tax implications of pension withdrawals will be based on your individual circumstances, tax legislation, and regulation, which are subject to change in the future.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

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