Do you want more money for your retirement? Here are five ways to boost your pension.
When it comes to pensions, one factor is crucial; size. Of course, how much you need in your pension pot depends on the retirement lifestyle you want to have. However, as a general rule, your pension pot should be as large as possible.
Building up your pension pot is a long-term process. Consequently, the sooner you start, the more time you have to accumulate your funds. Also, your retirement age is a consideration as the earlier you want to retire, the less time you’ll have to save.
This article aims to provide you with five ways to boost your pension. It will also inform you how the age you want to retire compares to the rest of the UK and three factors influencing when you can retire.
Five ways to boost your pension.
- Start saving now.
Every day is one day closer to your retirement. Therefore, failing to start saving today means you have lost another opportunity to build your retirement funds. By starting to save now, you will give yourself the best chance to maximise your pension pot.
- Make regular top-up payments.
Even making small regular top-up payments, or whenever you can, makes a significant difference to your pension pot. Remember, your pension contributions qualify for tax relief and will experience compound interest growth.
- Remain within your workplace pension scheme.
Being auto-enrolled into a workplace pension scheme is a fantastic benefit for millions of workers. You don’t have to do any administration, and your 4% contributions are taken at source. You’ll also benefit from tax relief and a 3% contribution from your employer. Therefore, you should only ever choose to opt-out of a workplace pension in the direst circumstances.
- Regularly check your pension.
You will put a significant amount of money into your pension pot. Therefore, it makes sense that you should keep an eye on your investment. Your pension could suffer from high charges or poor performance.
Both of these could erode your pension funds. Failing to regularly check your pension means you could be unaware of these. Consequently, your funds could be diminishing without your knowledge.
- Keep working a bit longer.
Remaining in work for a few years beyond your planned retirement will have a couple of benefits. Firstly, you will continue contributing to your pension pot without using those funds. Secondly, your pension funds will continue to receive tax relief and compound interest growth. These few additional years could make a significant difference to the size of your pot.
Three factors affect when you can retire.
People have aspirations to retire at different ages. Regardless of when you want to retire, here are three factors affecting when you can do so:
Extended working lives.
Generally speaking, people are working longer than they used to. The number of employed men and women in the 60-64-year-old bracket has grown significantly in the last decade. Indeed, almost twice as many women are now employed, and the number of men in work has increased by 14.3%. Today, around a quarter of 65-69-year-old men are still working. This compares to only 15% 10 years ago.
Rising State Pension qualifying age.
The State Pension qualifying age for men and women has equalised at 65. This situation is the first time parity has been reached in the 100 years since the state pension was introduced. Despite receiving the pension at 65, almost half of employed women don’t plan to retire until they are 67.
The maximum state pension you could receive is currently £179.60 for a week. If you don’t believe this is sufficient to provide the retirement lifestyle you desire, you should put other provisions in place.
Increased pension flexibility.
Pension freedoms were introduced in 2015, giving people more flexibility in accessing their pension funds. From 55, you can now take your pension as a lump sum for certain pensions. However, only the first 25% is tax-free. Therefore, you should consider the tax implications of taking too much money from your pension pot.
Of course, you can take the tax-free amount and leave the remaining funds invested in providing an income. You can also leave your entire funds invested to generate maximum income each month. Before making any significant decision regarding your pension, it is a good idea to consult a regulated financial advisor. Check out Portafina.
