Some say that size doesn’t matter, but that’s not the case when it comes to your retirement savings. The more money you have in your pension pot, the more comfortable you will be in retirement.Â
Therefore, you must amass as large a pension pot fund as possible. To help you achieve this, financial planning can be complex. It is always recommended that you use the services of a regulated advisor like Portafina when making financial decisions. Check out these five pension maximising tips and three factors that will affect the age you retire.
Five pension-maximising tips to boost your retirement savings.
- Start right now.
The more time you have to grow your pension, the larger it will be. Therefore, you should start right now to save for your retirement. Doing so will give your investments the maximum opportunity to grow and provide you with more income when you retire.
- Make regular top-up payments.
Making additional payments on top of your regular pension contributions can significantly affect the size of your pension pot. Remember, your pension contributions qualify for tax relief and benefit from compound interest growth. Therefore, even small top of payments have a chance to grow considerably.
- Remain within your workplace pension.
Workplace pensions provide an excellent means to prepare for your retirement, and they come with some considerable benefits. One such benefit is that you receive a minimum of 3% of your salary’s value as a contribution from your employer. If you were to opt out of your pension scheme, you would not receive this money. Therefore, remain in your workplace pension scheme and avoid losing thousands of pounds each year.
- Regularly check your pension scheme.
You will undoubtedly have certain expectations as to how your pension will perform. However, you need to regularly check your pension scheme to ensure it meets these expectations.
Underperformance or high fees could be eroding your pension funds. Regularly checking your pension will allow you to take the necessary corrective action to get it back on track.
- Extend the life of your pension.
Extending the life of a pension even by a few years can significantly affect its size. The longer you save into your pension scheme, the greater gross you get from compound interest. You will also continue to qualify for tax relief on your pension contributions, even when you extend its lifetime.
When can you retire? Here are three factors affecting this.
Extended working lives.
Generally speaking, people work longer today than they did in previous generations. Compared to ten years ago, almost twice as many 60 to 64-year-old women are working. The male workforce in the same age group still working has risen by 14.3%. For the 65 to 69-year-old cohort, 25% of men are still working compared to only 15% a decade ago.
Rising State Pension age.
Today, for the first time in history, the state pension age for men and women is the same at 65 years. The qualifying age has been rising since 2010 and is likely to increase in the future. Of course, this will influence the age you decide to retire.
However, at £179.60 per week, the maximum State Pension is unlikely to sustain a comfortable retirement lifestyle. Therefore, you should ensure you have other financial plans in place for your retirement.
Pension flexibility.
The government introduced legislation regulating pension freedom in 2015. Now, it is possible to access your pension funds from age 55 for certain pensions.
However, although getting a tax-free lump sum at this stage of your life may seem appealing, you should consider the implications it will have on your retirement income. Before deciding to access your pension funds early, you should consult with a regulated financial advisor to ensure you’re making the right decision.