Are you financially ready to retire?

Being ready to retire isn’t simply about being emotionally prepared to clock out from work once and for all. A happy and fulfilling retirement also rests on being financially ready.
 

Pre-retirement checklist - Are you ready for retirement?

So how can you know if you’re financially ready to retire? Some of the answers to these questions could help:

• Do you have a very clear idea of your financial needs and commitments in retirement?
• Will you still have an existing mortgage on your home to repay into retirement?
• If so, will you be able to manage the repayments, as well as maintenance expenses?
• Have you created a retirement budget, factoring in any pensions or benefits you may be eligible for?
• Have you thought of the possibility of unexpected expenses, such as needing a new car or a boiler breaking down?

How could property wealth help support retirement?

Selling and moving to a smaller property is one obvious option to access the wealth in your home. However, a lifetime mortgage, is a loan secured against your home, allows you to unlock some of the tax-free cash from your home while staying put. Remember, equity release will reduce the value of your estate and may affect your entitlement to means-tested benefits. If you're considering going ahead, we recommend reading 'Is equity release right for you?' carefully.
 

How to manage existing debt before retirement

Prioritise payments

Some debts cost more than others. The interest rate on a credit card is typically higher than that on a mortgage, so many people look to pay those with the highest interest first. This could be done by switching to a credit deal that offers 0% on balance transfers. Take time to figure out what each of your debts are costing over time.

Talk to your creditors

If you’re finding it difficult to make regular repayments on your debts, contact your creditor. They will usually be sympathetic and want to agree on a repayment strategy that works for you.

Review your outgoings

Look at your direct debits and standing orders to see if you have any unnecessary monthly expenses. Do you still need that magazine subscription? Do you still want to support those causes?

Better budgeting

A good budget will help you prioritise bills and could mean there’s more money to put aside for your retirement. See what other providers you might use, whether for food, utilities, insurance or even your mortgage. There are lots of budgeting and comparison tools out there.

Be mindful of financial gifts to others

It can be difficult to say no, especially to family. While many people use equity release to help loved ones, it’s important to consider your own financial needs first. Children, in particular, have time to build their own retirement savings, whereas your resources are finite. Everyone’s circumstances are different, so what’s right will vary, but prioritising your own security can help ensure you’re comfortable in later life.

Downsizing

If you’re lucky enough to own your current home, you might want to consider selling it and moving either to a smaller property or one in a cheaper area.

Keep earning

It’s not unusual to keep earning once retired, whether by taking a part-time job, consultancy role, freelance position or something less conventional, such as cat sitting or dog walking.

Turn clutter into cash

If, like many, you have a house full of unwanted items, it might be worth deciding what you’re willing to part with. It pays to do your research, however, items such as books, DVDs and CDs may only be worth selling in bulk. Others, such as jewellery, comic books and vinyl records might be worth more than you think. Get in touch with your local auction house for a free quote.
 

Spencer and Helen Carroll Case Study Example

“Since taking out equity release, we’ve been able to reduce our working hours and we’re now planning to retire”

Lancashire based couple Spencer and Helen Carroll were looking for a way to pay off their existing mortgage and other niggling debts before entering into retirement. The couple who both work within the recovery unit at their local hospital, carry out the admirable after-care for patients who have undergone surgery.

“We have always wanted to bring our retirement age forward and especially now as we suffer from arthritis,” explains Spencer. “We have looked into downsizing to raise the money but we didn’t want to move away from our grandchildren.

“Although we are very happy in our house, it was in need of some major repairs before we could be ‘retirement ready’.” Unsure where to turn, the Carrolls spotted one of Key’s adverts and were keen to find out more information about how equity release could help them.

“We arranged to speak to an equity release adviser who explained the whole process. For us, it seemed like the best of both worlds.” The couple discussed releasing some of the equity from their home with their son, adding “after talking it over, we came to the conclusion it would be the best option for us because it fit our every need.

“Since taking out equity release, we’ve been able to reduce our working hours and we’re now planning to retire. We have paid off our existing mortgage and debts which has taken a big weight off our shoulders.

“Thanks to equity release we are now entering retirement happy and relaxed with everything we need. We would not have been able to achieve this without releasing the equity from our house.”
 

Being Retirement Ready FAQs

What is the 3% rule in retirement?

The 3% rule is a spending guideline which suggests withdrawing 3% of your retirement savings each year to make your money last throughout retirement. It's a conservative approach aimed at preserving capital, but the right percentage can vary depending on your circumstances, lifestyle, and how long you expect retirement to last. Always seek financial advice before deciding on a withdrawal strategy.

What is the 7% rule for retirement?

The 7% rule suggests withdrawing no more than 7% of your retirement savings annually to avoid running out of money. Many experts now recommend 4–5% instead.

What is the first thing to do when you want to retire?

Start by reviewing your finances: check pension pots, estimate retirement income, and set a retirement budget. Then, decide your ideal retirement date and make a plan.

What is a good monthly retirement income in the UK?

A good monthly retirement income in the UK for a one person household is around £3,658 for a comfortable lifestyle, according to the Pensions and Lifetime Savings Association (PLSA). However, this can vary significantly depending on your housing situation, location, and personal needs—so it's important to plan based on your own circumstances.
 

Be financially aware

Lifetime mortgages are secured loans. Compound interest means the amount you owe can grow quickly. Equity release reduces your estate's value and may impact means-tested benefits. It may leave little or no property equity, reducing future financial options. You should always think carefully before securing a loan against your home to repay existing debt.

All our equity release advice relates to lifetime mortgages - a loan secured against your home. Our fixed advice fee of £1,699 is only payable on completion of a plan. If another product is more suitable, we'll refer you to a different adviser within Key Group to help. Key Group offers alternatives to equity release such as a retirement interest-only mortgage or retirement repayment mortgage.

It's important to know your other options before going ahead with equity release. These include: downsizing, unsecured lending, using existing assets, or support from friends or family. If equity release isn’t right for you, we’ll tell you.