Out of sight, out of mind, so the old saying goes.
Indeed, many people adopt this philosophy with tasks they are keen to put off addressing, such as cumbersome life-admin or making a dentist appointment. However, many Britons are also keen to embrace this approach when it comes to managing their retirement strategy.
Indeed, research from My Pension Expert found that an overwhelming majority (78%) of UK adults aged 35 and over rarely undertake a detailed review of their retirement savings strategy. This can be an incredibly problematic approach to retirement finance and could cause some serious financial problems later down the line.
The cost of losing track
Theoretically speaking, when an individual begins their career, they will sign up for a workplace pension, and regularly contribute to their pot over the years – leaving no real reason for a person to engage with their retirement strategy regularly. However, life rarely runs that smoothly.
Indeed, individuals will change jobs and consequently accumulate another pension, causing people to lose track of their various pots. And the cost of losing track can add up quickly. It is currently predicted that there is approximately £19.4 billion worth of pensions are currently sitting unclaimed because people have lost track of them.
As one might imagine, if an individual were to engage regularly with their pension strategy, it is less likely that they will lose track of their pension pots. Consequently, they will have a more realistic view regarding how much they have saved for retirement and be equipped to plan accordingly.
Changing circumstances
If the previous two years have taught us anything, it is that a person’s financial circumstances can change at the drop of a hat. And accordingly, individuals must be able to adapt their retirement strategy to suit their new financial situation. This might involve a change in their employment status, adjustments to government pension policy, market volatility, or even a change in their financial goals.
If caught off-guard, such changes could cause panic amongst savers and prompt rash decisions, which could damage their retirement outcome. For example, an individual may panic because of the rapidly increasing rate of inflation and suddenly place their pension savings into high-risk investments in the hopes of making generous gains – however, as the ‘high-risk’ element of such investments suggest, this could result in irreversible losses to their retirement funds.
Conversely, those who regularly engage with their retirement status will likely have a better grasp on what changing financial circumstances could mean for their pension and, more importantly, what adjustments could be made to ensure they remain on track to a prosperous retirement.
There is a clear case in favour of regular engagement with one’s retirement finances. However, it can sound like an overwhelming prospect for some. Luckily, however, help is on hand in the form of independent financial advice.
Help on hand
Independent financial advisers, like our team of experts at My Pension Expert, can help savers to develop and engage with a retirement strategy, from helping clients to tracking down lost pensions (once the appropriate permissions are given) to making tailored recommendations to help them achieve their desired retirement outcome. Our advisers also conduct regular strategy reviews for clients and discuss any potential changes necessary to ensure that their retirement savings remain on track.
In short, it is of the utmost importance that individuals engage with their retirement strategy, as it will strengthen their financial position once they reach retirement. And even if they are not sure where to start, independent financial advisers are always on hand to help them better understand their pension plan. Otherwise, Britons might find themselves in financial hot water in the future.