The final five years before retirement can be some of the most important in your financial life.
This is often the period when people have their highest earnings, their mortgage may be reducing, their children are becoming more independent and retirement starts to feel real rather than distant.
It is also the point at which rushed or poorly planned decisions can have a lasting impact.
Here are some of the financial decisions people are most likely to regret.
Retiring without knowing what life will actually cost
Many people reach retirement with a pension figure in mind, but without a clear understanding of the lifestyle that figure needs to support.
Retirement spending is rarely as simple as choosing one annual income and increasing it with inflation.
The early years may include more travel, home improvements, new hobbies, family support and larger one-off purchases. Spending can then change again later in retirement.
Before deciding when to stop working, it is important to understand not only what you own, but what you are likely to spend and how long your money may need to last.
Taking tax-free cash without a clear purpose
Accessing pension tax-free cash can feel like an obvious step when retirement approaches.
However, taking money simply because it is available can create problems.
Some people withdraw a large lump sum and leave it sitting in cash, where it may lose value to inflation. Others spend it without considering how it affects the long-term sustainability of their retirement income.
Tax-free cash can be extremely useful, but it should form part of a wider plan. There should be a clear reason for taking it and an understanding of what happens to the rest of the pension afterwards.
Holding too much money in cash
It is natural to become more cautious as retirement gets closer.
The thought of investment markets falling just before or after retirement can make cash feel like the safest option.
However, holding too much cash for too long creates a different risk. Inflation gradually reduces what that money can buy, while retirement may last 25 or 30 years.
Most people need a combination of short-term security and longer-term investment growth. Moving everything into cash may feel comfortable, but it can make it harder for your money to support you throughout retirement.
Helping children without testing your own position first
Many parents want to help their children with house deposits, education costs, weddings or general financial support.
The regret usually comes not from helping, but from helping without first understanding the effect on their own future.
A gift that feels affordable today may reduce future retirement income or leave less flexibility later in life.
Good planning can help establish how much support can be provided, when it should be given and whether gifting the money creates any wider tax or estate-planning considerations.
Delaying planning because retirement still feels a few years away
Five years may sound like plenty of time, but it passes quickly.
People often delay making decisions because they are unsure where to begin or because retirement plans still feel flexible.
This can mean missing opportunities to increase pension contributions, use tax allowances, restructure investments or gradually reduce working hours.
Planning earlier does not mean committing to a fixed retirement date. It means understanding your options while there is still time to improve them.
Continuing to work because you do not know whether you have enough
One of the most common difficulties is not knowing when work has become optional.
Some people continue working longer than they need to because they are worried about running out of money. Others retire too early without understanding the level of income their assets can reasonably provide.
There is no universal figure that guarantees a comfortable retirement.
The answer depends on your lifestyle, retirement age, tax position, investment strategy, expected expenditure, family commitments and how much you would like to leave behind.
Cash flow modelling can help bring these factors together and show how different decisions may affect your future.
Making retirement decisions with greater confidence
The final five years before retirement should not simply be about accumulating as much money as possible.
They should be used to understand what you want retirement to look like, what it is likely to cost and how your pensions, savings and investments can support it.
The aim is not to predict the future perfectly. It is to make better decisions while you still have time to adjust.
I have covered many of these subjects in more detail on the Clarity Wealth Limited YouTube channel, including retirement income planning, pension withdrawals, tax-free cash, investment risk and working out how much you may need to retire.
Visit the Clarity Wealth Limited YouTube channel to watch our latest retirement-planning videos and practical financial-planning guides.
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