If you’re pencilling “time to relax” into your Christmas schedule, you might use some of this festive downtime to complete the financial housekeeping jobs you’ve been putting off during the rest of the year.

Here are 10 simple steps you can take now to make sure you are financially prepared for the new year.

1. Calculate your incomings and outgoings

While December can be an above-average month in terms of expenditure, it is well worth getting to grips with your household cashflow as the year winds down.

Take a look at your incomings and outgoings to assess your level of disposable income. Are there any areas where savings can be made or where “surplus” cash can be redirected?

You might have bank accounts or utility providers that could be switched, or money going to waste on unused subscription services that could be saved or invested.

The new year is a great time to do some simple cashflow modelling and get on top of your budgeting.

2. Revisit your long-term plans

Long-term financial plans are based on long-term goals, but your priorities can change.

If life events this year have altered your priorities, your goals might have shifted too.

If your dream retirement looks different to the start of the year, get in touch. We can help you ensure that your plans are still aligned with your goals or make changes to ensure your new long-term plans are attainable.

3. Pay off high-interest debt

Your cashflow modelling might have highlighted issues with debt management. Where you are paying off debt, think about paying the highest interest debt – such as credit cards or car loans – first.

Tackling debt as you head into a new year is a great way to build a habit that could make all the difference in 2022.

4. Pay your future self first

Also, be sure you are paying your future self first. This means contributing to your pension and investments first and then budgeting with what remains.

If you receive a pay rise or a work bonus, directing this straight into a pension means the extra money won’t be missed. It will, though, increase your pension pot, hopefully helping to generate increased investment returns and compound growth.

The earlier you start building a pension pot, the more you’ll save and the smaller percentage of your salary in later life you’ll need to contribute.

5. Find lost pensions

You might also use your festive break to find all of your financial paperwork. If you have held several jobs throughout your career, you might have more than one pension.

Find the paperwork for these and you’ll have a firmer idea of the current state of your retirement plans. You might even compare the performance and fees of your different schemes and consider transferring or consolidating them.

Visit the Pension Tracing Service to find details for your lost plans.

6. Think about your retirement options

It’s never too early to start thinking about the retirement options that are the best fit for your dream retirement.

Balancing regular income with one-off lump sums might be your best option but you’ll need to think about life expectancy, your ability to budget, and whether you’ll have enough left over for potential future costs like care.

We can help you match your pension options to the type of retirement you have always dreamed of.

7. Or check in with your retirement income amounts

If you have already retired, be sure to enter the new year making sustainable withdrawals from your pension.

Stock market fluctuations and government announcements on social care could all affect the amount of pension you can drawdown, or how far your annuity will stretch.

We can help you balance the desire to live the life you want now with the need to leave an inheritance.

8. Prepare for the end of the tax year

The tax changes and freezes to thresholds that have been announced throughout 2021 mean that preparing early for tax year end is vital this year.

If you haven’t used all of your pension Annual Allowance, you’ll be missing out on potential tax relief.

You can receive relief on up to £40,000 (or 100% of your pensionable earnings, if lower), so plan to make the most of this tax efficiency over the next few months. Remember too that as a higher- or additional-rate taxpayer you can claim extra relief via your self-assessment tax return.

9. Update your will

A will is the best way to make sure your estate is distributed in a way that aligns with your wishes.

If you don’t have one, the new year is the perfect time to put one in place. If you do have one, is it up to date?

Remember that life events can alter your priorities and could mean changes are needed.

10. Book a review

Start the new year on top of your finances by booking in your regular The Pension Planner review.

We can help ensure your plans are still on course and give you peace of mind as you head into 2022.

Get in touch

Whatever aspect of your long-term retirement plans you need help with, get in touch. Email info@thepensionplanner.co.uk or call 0800 0787 182.

Please note:

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits.