When it comes to your pension pot, you should adopt the principle of the-bigger-the-better. Of course, everyone has different needs and aspirations for their retirement years, so what you need in your retirement fund depends on that. Growing your pension pot depends on a couple of factors. Firstly, how much you can afford to put into your pension pot each month. Secondly, how much time you have left to grow your pension before you retire.
Read on to discover five tips for maximising your pension fund. Also, you will learn how the age you plan on retiring compares with the rest of the nation and three factors that influence when you’ll retire.
Five Pension-Maximising Tips
- Start Saving Immediately. Time is precious when it comes to saving for retirement. The sooner you start saving into your pension, the more time you’ll have to grow your pot to the size you desire for your retirement.
- Top Up Your Pension As Often As Possible. Regularly topping up your pension, even by s small amount, could have a significant impact over time. Remember, your pension contributions are tax-free and benefit from compound interest.
- Remain In Your Workplace Pension Scheme.
Opting out of your workplace pension scheme could mean losing out on thousands of pounds. As of April 2019, 8% of your salary’s value gets contributed to your workplace pension. These contributions include 3% from your employer, which is money you’d lose out on if you chose to opt-out.
- Regularly Check Your Pensions.
You should regularly check that your pension remains on track to meet your aspirations for retirement. You may have started to save into your pension early and maintain regular payments. However, poor performance or high pension charges could be eating into the growth potential of your pot. Maintaining regular checks on your pension through a regulated financial advisor means that you can keep it tailored to meet your retirement needs.
- Keep Working a Bit Longer. Continuing to work for a few extra years could make a considerable difference to the size of your pension pot. The longer you keep your pension funds invested, the more opportunity they will have to benefit from compound interest growth. Any contributions you make during these additional working years will also qualify for tax relief.
Three Factors Affecting Your Retirement Age
- Longer Working Practices.
There has been a sharp rise in the number of people deciding to remain in employment between the ages of 60-64 in the past decade. Today, almost twice as many women are in this age group still in employment as there was in 1998. There has been a rise of 14.3% in the number of men choosing to work longer.
- Rising State Pension Age.
The age at which men and women qualify for the State pension has equalised for the first time in more than 100 years. The age you can receive your State Pension is 65, but many people (around 50% of women) choose to delay their retirement until they are sixty-seven. The current full State Pension is £179.58. If you have no other plans for your retirement other than the State Pension, you should consider whether this will be sufficient to sustain you through your retirement.
- Increased Pension Flexibility.
From 2015, there has been increased flexibility introduced into how you use your pension funds. You can take up to 25% of your pension fund at the age of fifty-five as a tax-free lump sum. You can also take further taxable lump sums. However, taking money early from your pension fund could leave you short when it comes to your retirement. Therefore, if you are considering this option, you should first seek advice from a regulated financial advisor.
Regardless of your retirement aspirations, it is crucial to boost your retirement funds as much as possible. Hopefully, following these pension-maximising tips will prepare you better for your retirement. Before looking at options for your pension, consider using a regulated adviser like Portafina or, view the information at The Money Advice Service.