The world of pensions can be complex at the best of times. The thought of this often delays us in making sure we will have enough funds in our later years. But there are some tasks you can build into your life to maximize what monies you will receive in retirement. In a culture where we tend to put off worrying about our autumn years until the last possible moment (and then suffer), it is important to keep your pension front of mind from a very early age. So where to start?
Step 1 – What will retirement look like?
As medical skills and knowledge enhances lifespan, it is likely the number of our working years will be eventually dwarfed by the years we will have in retirement. This opens up a whole new time zone in later-life to prepare for. But still, most people don’t take enough time to seriously consider what they actually want from retirement. Securing this vision will make the concept of future funding essential. Whether it is making time for hobbies, spending more time with family and friends, or preparing for new adventures, we all need money to fund our dreams and ideals. The earlier you start saving for the future and the more you monitor those funds, the easier it will be to deal with financial upsets and the closer you will be to your overall goal.
Step 2 – Double check your state pension
If you are earning, you will be contributing to your state pension through National Insurance contributions. This money will go towards your pension by default. But don’t take it for granted. Continue to check throughout your working life what you will be receiving, as periods of unemployment, part-time work etc. may reduce the final amount. If you need to you can top up your contributions. Click here to check how much state pension you will receive.
Step 3 – How much will you need?
How long is a piece of string is probably an easier question. But one thing we do know is that inflation will have an effect on the spending power of your pension. Your state pension is only a base amount – a starting point. Most people also contribute to a work pension or private pension to top-up their state pension. Think seriously about opting out of a work pension – keeping your eye on the future can be great benefit when the time arises.
Step 4 – Review your pension money often
Ok, so you have a plan and regular contributions going in. It is a good idea to regularly check out how your pensions are performing. You are likely to receive update letters from your work and private pensions. If a private pension is not performing well then it is worth seeking out the guidance of a registered financial advisor to make sure no further damage is done to your investment. Pensions are flexible so you can change how much you are putting in – or you can consider changing which pension company you use. For more information on Pensions get in touch with an FCA regulated advisor, such as Portafina or visit Pension Wise.