In many aspects of life, size matters, and this is particularly the case with pensions. Regardless of income or aspirations for retirement, your aim should be to grow your pension as much as possible.
Consequently, the longer you invest your pension funds, the greater opportunity it has to grow. Therefore, your planned retirement age will affect your potential income once you’ve retired.
This article aims to give you five pension boosting tips and three factors affecting when you can retire. Getting professional and regulated financial advice will help you with planning for your retirement, check out Portafina.
Five Pension Boosting Tips
- Start Saving Immediately.
As we mentioned earlier, the more time you give your pension to grow, the better. Therefore, start saving right now.
- Make Regular Top-Up Payments.
Paying additional amounts into your pension can significantly impact your pension funds over the long term. Even if such top-up payments are small, compound interest growth over time will boost them. Also, you receive tax relief on top-up payments as with your regular contributions.
- Stay Enrolled In Your Workplace Pension.
A workplace pension helps you become financially prepared for retirement. You also benefit from contributions from your employer amounting to at least 3% of your salary.
Opting out of a workplace pension means you would miss thousands of pounds each year. More crucially, you will not be as prepared for your retirement. Therefore, stay enrolled in a workplace pension scheme.
- Regularly Check Your Pension.
Saving into a pension is a good start in preparing for your retirement. However, merely paying into a pension fund is not sufficient. Leaving your invested money to its own devices can harm its growth.
For instance, underperformance and high management fees can negate your funds’ growth. Therefore, regularly check your pension, and make changes to improve your pension’s performance and reduce management charges.
- Contribute a Bit Longer.
Continuing to work for a few more years and contributing to your pension. The longer you pay into your pension, the greater opportunity it has to grow. Putting off your retirement for just a couple of years can significantly boost your pension.
What Affects Your Retirement Age?
You may have already decided when you want to retire, or you might yet have to plan this. There are three factors that you should consider when deciding when to retire:
- Extended Working Lives. People are generally working longer. The number of 60-64-year olds still employed has risen significantly in the past decade. Indeed, almost twice as many women and over 14% more men have extended working lives compared to twenty years ago.
- Rising State Pension Age. Today, the State Pension qualifying age is the mid-60s, which is likely to increase. If you rely on the State Pension, you will have to postpone your retirement until the qualifying age. The maximum State Pension is £179.60 per week. If this is insufficient to provide you with the retirement lifestyle you desire, you should ensure you have other financial plans.
- Greater Pension Flexibility. Pension Freedoms introduced in 2015 give you greater flexibility over how you can access your pension funds. From age 55, you might be able to take your pension as lump sums, 25% of which is tax-free. However, before taking too much money early, you should consider the impact it could have on your income later in retirement. Consulting a regulated financial advisor can help you make the right decision.