Whether you’re at the beginning of your career or approaching pension age, there are plenty of resources to help you plan ahead
Are you thinking about your retirement? If not, now is the time to start – whether it’s just around the corner or decades away.
If you want to carry on doing the things you love after you’ve stopped working, it makes sense to lay the financial groundwork now.
A great starting point is to think about how you see your life once you’ve retired, and how much you’ll need in order to fund it. Then, have a look at your plans to make sure they match up to what you need.
It doesn’t have to be daunting or complicated, and you’ll find plenty of simple steps, guidance and tools to help you at yourpension.gov.uk. These ten tips will put you on the right track.
1. Start simple
There are many things you can do to get on top of your retirement plans. A lot of the information and guidance available is free. You don’t have to do it all in one go; set aside a few moments at the weekend and take one step at a time.
2. Check your State Pension
It’s the foundation of your income when you retire, so it’s important to find out what you could get and when. The age at which the State Pension can be claimed is not the same for everyone, so check yours here. The full rate of the new State Pension is currently over £9,300 a year, but yours may be different because it’s based on your own National Insurance record.
3. Mind the pension gaps
If you’re currently claiming certain benefits, National Insurance credits can help fill in gaps in your National Insurance record – you can check them at the same time as you check your State Pension. Most credits are paid automatically, including if you get Universal Credit, Employment and Support Allowance or Jobseeker’s Allowance.
You also get credits if you’re caring for a child under 12. If you get Child Benefit, credits are paid automatically. Even if you will not receive the monetary award of Child Benefit, you can apply to receive the credits for your National Insurance record. If you care for a child under 12, such as a grandchild, usually while their parent or guardian is working, then you can apply for the National Insurance credit instead.
You even have the option to pay voluntary contributions to fill in any gaps before you reach your State Pension age.
4. Save while you work
If you’re working, you’re probably saving into your workplace pension. And when you pay in, your employer normally does too. It’s the easiest way to save for your future.
Your payslips show how much you’re paying in and how much your employer is contributing, so you can watch your pension pot grow. Most pensions will send you an annual statement; if not, ask your pension scheme provider.
If you had the option of a workplace pension but chose to opt out or decided to stop paying in, then you’re giving up money your employer would have contributed for you. If you’re able to, consider rejoining the scheme. Just talk to your employer to find out how.
5. Don’t lose track
Most people have several jobs during their working life, so you may have a number of pension pots. Some pension schemes allow you to consolidate what you have saved into a single pension pot, or move money from smaller pots into a bigger one.
6. Start as early as you can
Retirement might seem a long way off, but it’s important to save for the future you want. The longer your money is in a pension scheme, the more time it has to grow – in most cases, any interest you earn will be reinvested back into your savings, building your pension pot even more.
7. Pick the right products
Consider your retirement saving options. There’s a whole range, including private pensions, lifetime ISAs (LISAs) and additional voluntary contributions to your workplace pension.
8. Keep on top of it
You should put money away as soon as you can, but even if you’ve been working for years, it’s not too late to start.
It’s important to review your retirement plans regularly and make sure they still suit your needs. Maybe put the same date in your diary each year to calculate how much you could get.
9. Make the most of your freedom
You can decide what you want to do with some types of pension pot. Pension plans vary in flexibility, but you cannot normally begin to access your pension benefits before the age of 55.
10. Want to keep working?
There are many options beyond your retirement age. Lots of people choose to keep working, albeit in a different job or doing fewer hours. Continuing work may be good for your health and wellbeing, and can offer companionship. Many employers are keen to hang on to their valued older workers. Make the most of training; it can lead to new opportunities in the workplace. Think whether saving more now could help you work the way you would like to in the future.
