You may not think it, but planning for your retirement is important at any stage of your life. Facing financial burdens each month can mean it’s tricky to find ways or understand how you can really make the most of your pension contributions. So, it’s important to try and boost your pension in the most convenient ways.
According to Close Brothers Asset Management Financial Planning Services, when it comes to retirement planning: “It is important to structure your wealth in a way that ensures you have sufficient funds, without having to compromise the way you live your life prior to retirement.”
Remember, depending on your retirement plan, the value of investments can go down as well as up, and you may get back less than you invested.
However, there are some handy tricks that you can take advantage of in the lead up to retirement, that can boost your pension without having an impact on your present lifestyle.
4 ways to boost your pension
1. Make the most of a pay rise or bonus
If you have a defined contribution pension, either through your workplace or one you’ve set up for yourself, you can usually contribute extra to your pot and build on its growth.
The most straightforward way to boost your funds is to pay more into your pension. But it’s likely you’re already paying in what you can afford each month. This is where you can make the most of a pay rise or employee bonus. As you’re not used to having this extra income at your disposal, it can be a good opportunity to use a portion of a pay rise or bonus to contribute to your pension.
Plus, making use of your pension contributions also means you benefit from the uplift of tax relief. The amount you pay into your pension pot will be worth more than it would as income, as any extra money will succumb to taxes before it gets into your pocket.
2. Time with the end of a regular payment
In the same way as above, a good time to contribute to your pension is when a regular expense comes to an end. You will be used to a regular payment leaving your account, so you can use this to your advantage to boost your pension.
For example, if you have fully paid of a loan or money towards a car, you can pay the extra money to your pension plan instead, when this comes to an end. The smallest increase to your pension contributions can accumulate to a huge benefit in the long run.
3. Delay when you take income from your pension
With a defined contribution pension, the longer you leave your pension untouched, the more time there is to contribute to the pot, and the longer it has to potentially grow. You could build up more of your savings, if you decide to retire at a later stage. As previously mentioned, it’s important to remember that there’s no guarantee your investments will grow, as the value of investments can go down as well as up, and you may get back less than you invested.
When working with a financial adviser or your pension provider, you may need to consider the way in which your pension is invested to make sure it aligns with your retirement goals, and the age in which you wish to break into the pot.
It may also be the case that working up until an older age is not right for you either. You should therefore explore all options to boost your pension, so that it suits your lifestyle.
4. Seek pension advice
Planning for your retirement can be complicated, so one of the best ways to make sure you are making the most of your pension is to get advice from a professional financial planning service.
Using their expertise, you can ensure that you understand the pension annual allowance and lifetime allowance, and are saving in the most tax-efficient way. With the help of a financial adviser, you can reach your retirement goals and boost your pension in the best possible way.
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