Happy Pensions Awareness Week, savers!
Meeting your retirement goals isn’t always straightforward, and a critical first step in making it happen is fully engaging with your pension planning and strategy.
Despite this, many Britons are falling short in this area; My Pension Expert found that nearly two-in-five (37%) UK adults not yet retired know how much is saved in their pension pot, and fewer still (34%) have a financial plan in place for later life.
Naturally, there can be all sorts of reasons this happens. Feeling overwhelmed or under-supported can lead to us burying our heads in the sand, for example. Auto-enrolment has also been a double-edged sword for savers. Although, positively, it’s catapulted the number of workplace pensions, with over 10.6 million workers being onboarded, the downside is that its automated nature makes it easily forgotten about or over-depended upon by planners.
So, what needs to be done? Ramping up support from the government, in tandem with the financial services sector, is ultimately the biggest hitter for widespread change. However, savers can re-empower themselves and start taking steps on their own to build better savings habits to pave the way to financial security – and what better time than Pensions Awareness Week to get in gear!
Here are four important ways to getting retirement-ready starting today.
Start with your goals and work backwards
Firstly, ask yourself: what do I want my retirement to look like? Do I want to travel, or take up new hobbies? How much money is required to fund that lifestyle?
The answers to these questions are your retirement goals. Without setting clearly defined goals, it is impossible to know what your financial strategy is aimed at achieving, so this is pension planning basecamp.
Outside of sitting down and working it out with a financial advisor, the Pensions and Lifetime Savings Association’s Retirement Standards is a great jumping-off point for working out your retirement cost-of-living.
With a clear-cut target in mind, you can follow your progress and portfolio and evaluate whether you’re on track. If it’s not quite adding up, you can tweak your approach, for example by increasing contributions or exploring new investment options if required.
Stay laser-focused on your pension pot
Even though so many savers are failing to engage with their pension planning, one fix is simple. Taking time to review your pension statement regularly and consistently – even if that’s just once a year – is a great way to refocus your attention on your retirement.
That one habit can do wonders for your pension engagement: it helps you stay up-to-date on your pot’s balance, lets you know where your money is invested, and establishes if you’re on-target to meet your retirement goals.
Up your contributions
This might sound like an obvious one, but there’s a few reasons it’s still worth mentioning.
Think about upping your pension contributions if you can – and the earlier the better. Even the smallest boosts in your monthly contribution can significantly grow your pension over time due to compound interest, equating to larger savings down the line.
Some employers also offer matched-contributions schemes, where they put in an equivalent amount to you (up to a certain percentage). Fundamentally, with tax relief factored in, this benefit is free money for savers, and bigger contributions ultimately mean bigger pension pots.
Seek professional advice
When in doubt, talk to a professional. After all, every saver has a unique set of financial goals and circumstances. When faced with the wide array of pension products and investment options that are on offer to consumers, many might feel overwhelmed and reluctant to take action, not knowing their best option.
An independent financial advisor (IFA), such as those within our expert team at My Pension Expert can provide impartial advice, helping you understand the intricacies of pension products and will create a tailored financial plan to best suit your individual retirement objectives. With their support, you’re equipped with the knowledge and understanding to make well-informed decisions that keep you on the right path with your goals.
Engaging with pension planning is critical to a financially secure, healthy retirement. So, get started with these tips this Pension Awareness Week and steer back on course with achieving whatever your retirement aspirations may be.