Retirement income playing on your mind? Want to be as prepared as you can be for this next chapter? Even if retirement is just around the corner, there are steps you can take to increase your eventual retirement income. This applies to both your State Pension entitlement as well as to any personal or workplace pension pots.
We’ve outlined some key areas to consider that you may wish to discuss with us to help you to meet your goals for retirement.
Firstly, locate pension pots that you may have forgotten about. The Pension Advisory Service and the Pension Tracing Service can help you to trace forgotten pension pots. Remember to take your State Pension into account. Check your State Pension entitlement to help determine if and how much you’re likely to receive when you reach State Pension age – and whether you’ll need to top it up.
It is beneficial to think about topping up your pension in the years leading up to your retirement. That little bit extra could make a big difference. Remember, you might be eligible to top up your State Pension too. This could be particularly useful if you’re self-employed or a woman because it’s possible your State Pension entitlement may be low.
From the age of 55, you can draw out your pension savings as and when you need them and still pay into your pension. You’ll continue to receive tax relief on your payments up to age 75, although taking benefits flexibly will limit how much you can put in.
Both you and your employer must pay a percentage of your earnings into your workplace pension scheme. How much you pay and what counts as earnings depend on the pension scheme chosen by your employer. It's worth asking your employer about the rules of your pension scheme.
In most automatic enrolment schemes, you’ll make contributions based on your total earnings between £5,876 and £45,000 a year before tax.
When you increase your contributions to a workplace pension or private pension, some employers will also boost the amount they contribute.
If you have paid into several different pensions over the years and find it hard to stay on top of all the paperwork, you could consider consolidating your pensions into one plan. This will also help to keep track of your overall retirement sum and whether you’re on track towards your targets.
Before you switch, it is crucial to obtain professional advice to check that you don’t have any guarantees that you’ll lose by moving your pension savings to another scheme, and that the charges you pay aren’t higher in the new scheme.
Not all pension types can or should be transferred. It’s important that you know and compare the features and benefits of the plan, or plans, you are thinking of transferring.
It is worth considering that delaying your retirement might give your pension fund more chance to grow. Remember though, if your pension fund remains invested, the value could go down as well up and you may not get back what you put in. If you defer your retirement, it’s also important to check whether this will affect any state benefits you’re entitled to.
Working part-time for a while after you finish full-time work might enable you to delay drawing money from your State Pension or your pension, meaning your money may last longer when you do retire.
You could consider trying something new, like setting up your own business. Becoming your own boss could be a good way to stay active and keep earning.
PENSIONS ARE A LONG-TERM INVESTMENT. THE RETIREMENT BENEFITS YOU RECEIVE FROM YOUR PENSION PLAN WILL DEPEND ON A NUMBER OF FACTORS INCLUDING THE VALUE OF YOUR PLAN WHEN YOU DECIDE TO TAKE YOUR BENEFITS, WHICH ISN’T GUARANTEED AND CAN GO DOWN AS WELL AS UP. THE VALUE OF YOUR PLAN COULD FALL BELOW THE AMOUNT(S) PAID IN.