Retirement is an eventuality that needs to be focused on from time to time during your working life, especially in your final years and months in the job.

Advisers on retirement planning agree that it is a major life change, which is best approached with common sense and careful preparation.

There are fundamental lifestyle changes to adapt to and the implications for relationships, daily routine and financial well-being need to be addressed sooner rather than later.

There are more than 400,000 people aged over 65 in the State and most rely on a narrow range of sources of income. Whether you have a personal pension plan or are a member of an occupational scheme, the main financial issues facing people at retirement are generally the same. Retired people usually have a different set of financial priorities from working people and need to rethink simple issues like saving and spending patterns and assurance needs. According to Mr Hilary Shannon, chief executive of the Retirement Planning Council, many more older people have taken up part-time positions in the workforce in recent years.

The challenge in retirement is to create a new balance when the demands and benefits of the job are fully or partially removed. Sorting out your financial position is an important starting point for getting it right in retirement.

Do your sums: Now that your retirement date is approaching, it's time to take a realistic look at your finances. You can start by putting together figures for unavoidable outgoings and normal additional spending.

This is a good opportunity to see what possible savings or extra expense retirement will bring. It may be more complicated to work out expected sources of income, as it takes a certain amount of research.

Research: The more you know in advance the smoother the transition to retirement will be. Mr Shannon has found that people make incorrect assumptions about retirement finances and pensions.

It's a good idea to start a retirement folder at least six months before you retire. You can use it to collect all the relevant brochures and facts connected with retirement issues. Mr Shannon recommends a fact-finding visit to your local tax office and social welfare office and a good read of any material relating to your pension scheme.

Pre-retirement seminars are organised by many employers and unions and are an excellent source of information.

Lump sum: All pension schemes allow you the option of taking a certain portion of your benefits at retirement in a tax-free cash lump sum. For many this will be the first time they have had access to such a windfall.

The lump sum can be seen by some as a bonus to be spent quickly or spread around the family. But it's important to first ensure than an adequate pension income is in place. The lump sum can be used to boost a retiree's income and is an investment opportunity.

The Retirement Planning Council advises that each person's circumstances should be examined in detail to determine which investment is best suited to their needs.

The eventual decision will be dictated by how the following are prioritised:

security of capital;

access to the money;

potential tax efficiencies;

growth;

a regular income.

It makes sense for first-time investors to use independent financial advice to help in the quest for the most suitable investment vehicle. Be prepared to pay a fee for the service and remember this is a golden opportunity to shop around.

Income tax: Returns are due to be made before January 31st in the year after the tax year. We are currently at the beginning of a short tax year from April to December. From January 2002, the tax year will be aligned with the calendar year.

State benefits are taxable but paid to you gross. There is a small income exemption of £4,100 (€5,210) for single people and £8,200 for a married couple under 65 years. This rises to £8,500 and £17,000 respectively for those aged 65 and over.

All your personal and other allowances are given to you as a tax credit at 20 per cent to be used to reduce your tax liability. Tax tables for 2000 and 2001 rates and allowances are available from your local tax office.

Social welfare and other entitlements: You can be eligible for certain benefits depending on the PRSI class you were in and entitled to the benefits if you fulfill all the conditions attached to that benefit.

The Old Age Contributory Pension is not means tested although the Non-Contributory Pension is. The full rate is £106 per week for the contributory pension and £95.50 for the non-contributory. Retirees are advised to apply for the pension three months in advance of their 65th birthday. The Personal Public Service (PPS) number, which is required to apply for the contributory pension, is the same as your old RSI number. Those receiving a social welfare pension generally also qualify for a fuel allowance, electricity and gas allowance, free television licence and free telephone rental. From the age of 66, everyone resident in the Republic is entitled to free travel, which covers travel on Bus Eireann, Dublin Bus and Iarnrod Eireann. Those with sufficient full contributions to social insurance are entitled to optical and dental benefits and hearing aids. Financially dependent spouses are also entitled.

From next month, all residents in the State over 70 years will be entitled to a medical card.