You may be carefully putting some cash aside for your retirement, but how confident are you that the pot you’re building will give you the sort of lifestyle you want? Saving for a pension and getting proper financial planning for retirement is vital, especially as you get closer to retirement age.
Financial planning for retirement
A survey has found four in five (80%) people do not feel confident that they’re putting enough aside for later life. This equates to some 30.4 million working-age people across the UK – who risk not being able to afford the lifestyle they want in later life, according to the report from the Pensions and Lifetime Savings Association (PLSA).
Of course, people’s ideas about how they’d like to spend their retirement may differ; you may want to get help from bodies like Pension Wise, or perhaps seek independent financial advice.
Meanwhile, here are some general tips from Nigel Peaple, director of policy and research at the PLSA, to help with retirement planning…
Financial planning for retirement tips
1. Enroll in your workplace pension
Do consider enrolling in your workplace pension, if you are eligible and have not done so already. One of the main benefits of a workplace pension is that your employer has to pay in too. Over a third (36%) of people we surveyed said their employer matches their pension contribution, and a quarter (26%) have an employer who pays in more than they do.
2. It’s never too late to start saving for a pension
Don’t think that it is too late to start saving. If you haven’t been paying into a pension previously, and you think that there is no point starting now, don’t be discouraged. The added benefit of your employer’s contributions, the tax breaks you get from the Government, and investment growth all mean that your money will go further than you think.
3. Use financial planning for retirement services
Do make use of the support available when you approach retirement. Pension Wise is a free Government guidance service offered to people aged over 50, to help them understand the different options available at retirement.
4. Make sure your saving enough into your pension pot
Don’t assume that the amount you are saving into a workplace pension is enough. The minimum workplace pension contribution level is currently 8%, and half (51%) of people surveyed wrongly think this minimum is the “recommended amount”.
Are you saving enough into your pension? Financial planning for retirement means working out how much you think you’ll need and plugging any shortfall in your pension pot. Read Wise Living’s retirement savings guide to calculate how much money you’ll need in retirement.
5. Save more money into your pension pot
Do consider whether you could be saving more for your retirement. A third (34%) of people said they could afford to save more towards their pension – increasing to 42% of millennials. While not everyone will be able to afford to, if you can put more into a workplace pension, it’s possible you could also benefit from higher contributions from your employer. Look for ways to top up your pension, such as opening and saving into a personal private pension outside of work.
6. Review pension savings statements
Don’t ignore your annual statement from your pension provider. It’s important to read your statements and consider whether you need to take any action as a result. For example, paying more into your pension, updating your expected retirement age, or consolidating different pension pots into one with lower charges.
7. Talk to an IFA about financial planning for retirement
Do consider regulated financial advice. An independent financial adviser could help you get the right product or products to suit your needs and help your money go further.
Looking to find the right pensions IFA for you? Read the Wise Living guide to choosing the best pensions financial advisor.
8. Ask the right questions about your pensions savings
Don’t be afraid to ask questions when financial planning for retirement. If you have any questions about your pension pot, such as charges or your investments, your scheme provider will be able to help. The Pensions Advisory Service can also offer free, independent information and guidance on pension matters.
9. Make sure you look at all retirement options
Do spend time thinking about how you want to access your money in the lead up to retirement. Only a third (31%) are confident they understand all the options available. Deciding what to do with pension savings is a very complex decision and sometimes you only have one chance to get it right, so it’s important to dedicate some time to retirement planning.
There are lots of options when it comes to accessing your money, such as pension fund drawdown. Read the Wise Living guide to pension drawdown and flexible retirement income.
10. Watch out for pension scams
Don’t fall into a scammer’s trap. Be wary if a company approaches you out of the blue – whether over the phone, on email, or in person – and if they make claims of high returns with low risk, or tax loopholes. If it sounds too good to be true, it usually is.
Need more financial planning for retirement help? Read the Wise Living guide to pension management on how to manage your pension for a happy retirement.