As retirement gets closer, your planning around it becomes more important. The final five years leading up to retirement often prove to be the most crucial.

Ideally, by this point, your pension scheme should have matured enough to deliver the necessary income for a comfortable post-career lifestyle, or other plans have given sufficient return for you to feel confident that you’ll be secure and comfortable.

Sadly though, we’re all familiar with the oft-quoted phrase ‘the value may go down as well as up’, so it’s essential to review your financial plans regularly to ensure a stable retirement income.

Have you made ample provisions for the type of retirement you want to enjoy? If the answer is no, you have five years to get back on track, or you may well have to work longer before you can afford to retire.

The starting point for your five-year retirement plan should be to work out the income level that you’ll need to fund the lifestyle you need, or would like.

The Pensions and Lifetime Savings Association suggests a minimum annual retirement income of £12,800 for a single pensioner to support a basic lifestyle.

The reality is though that you’re likely to want more than just the necessities.

Running a fairly modern and comfortable car, holidays and social events all add to the enjoyment of life, so include those in your costings. You might choose to maintain your existing lifestyle, and enjoy it fully, without the distraction of running a business!

You may find that your expenses reduce. While commuting costs and pension contributions fall away, other expenses, like utilities, groceries, and healthcare, are likely to remain the same or even increase over time.

One significant factor to bear in mind is inflation.

Many pensioners on fixed incomes are finding their pension funds depleting faster than anticipated with the current high rates of inflation, so it’s important to include a substantial buffer to your projected monthly expenditure.

Consider your current monthly expenses and project what they may be in five, ten, and twenty years from now. Familial longevity patterns and your current general level of health will give you an idea of how far ahead you should be looking.

If your family members typically live into their 90s and you’re in good health, you may want to plan for a similar lifespan. However, bear in mind that you’re likely to need extra funds for potential care costs in later years if you can’t live as independently as you do currently.

The full state pension currently stands at approximately £10,600 annually. It’s not enough on its own to fund a comfortable retirement. If you qualify for the full amount – currently £203.85 weekly or £10,600 yearly – you would still need an extra £2,200 annually from your personal savings for even a basic retirement lifestyle.

In reality, you’ll likely need an income comparable to your current earnings. To be sure this is achievable you need to look at your pension plans, along with any savings and investments, to see what your probable retirement income will be.

If you find that you’re unlikely to be financially prepared for retirement in five years, you do have some options:

• Could you make changes to your planned retirement lifestyle that would reduce your expenses?
• Could you increase your savings or investments towards retirement enough over the next five years so they’ll produce sufficient income once you retire?
• Are there other sources of income that you could create or increase? 

The best way to find reliable answers is to get some expert help from an Independent Financial Adviser (IFA). They can help you with your five-year retirement plan, and make your money work harder if necessary, getting you closer to the retirement you have in mind.

If you don’t have an IFA, please get in touch or visit Finding an adviser | FCA.