So, the British state pension is being pulled further and further away from us, pension ages have risen and people are now having to rethink retirement planning and retire later than expected. With the full state pension usually representing a backbone income-for-life of around £8,000 per annum, it could be a major loss when missing out on several years’ worth.

Women have been particularly affected. Their state pension age, until recent years, was 60. Now those aged 58 previously expecting to retire from 60, won’t get their pension until they’re 66. This is pretty tough. While clearly age equalisation was needed, it’s still a bitter pill for those so close to retirement.

So what are your options? As advisers, undertake retirement planning with clients every day. Most people want to retire earlier than their state pension age if they can afford to. Everyone at least wants the option to retire, the knowledge that they could, at any point, strop straight out of work and into retirement.

Now we have pension freedoms, the majority of our work as financial and retirement planners is gap-filling. That is, filling the gap in income between when you actually retire and when the state pension will support you. So, a 60-year-old retiring, has 6 years before they get the pension from the government, so need to find a higher income in the interim from other sources, which they can then ‘turn down’ when they are able to claim from the state. Pension freedom – that is the flexible rules over being able to draw unlimited income from your pension fund, offers a great opportunity to do just this, and gap-filling is becoming the keystone of at-retirement advice.

For many couples, a joint income in retirement of, say, £30,000 a year is sufficient, so that 60-year-old needs to find their own share, £15,000 a year, until they reach state pension age and can rely on a lot of the income being structured and automatic. So, under flexi-access drawdown, they can draw £15,000 each for the first 6 years (between 60 and 66) then turn this down to just £7,500 at the point they claim from the state. By filling this gap, you can ensure a steady retirement income, perhaps spending more of your private pension funds in the first few years of retirement than you had envisioned, but for most, providing a valuable income in the first years of stopping work when you can really enjoy yourself and do all those things you’d always planned.

For more information about the state pension, or how you should be planning for an income when you no longer work, please get in touch. To find out about your UK state pension entitlement, log on to the Government Gateway, or search for a BR19 online, that’s the form to send off and apply for your own personalized forecast along with options of how you may be able to top it up if you’ve haven’t saved for the full 35 years.