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The exact amount of money people have in their retirement pots will differ, as will their aspirations and goals for their retirement. However, one thing you will share with most other people is the aspiration of having as much as possible in your pension fund. Getting professional and regulated financial advice will help you with planning for your retirement, check out Portafina.
How much is enough boils down to what you want to do when you retire. Your retirement age is another factor that will influence your pension pot.
Read on to discover five ways of maximising your pension fund. We’ve also included a few factors that will influence when you can retire.
Five ways of maximising your pension funds.
1. Start saving today.
By starting to save for your retirement today, you will give your pension as much time as possible to grow. And the longer it has to grow, the more benefit you will receive from tax relief and compound interest.
2. Make regular top-up payments.
Even paying a little extra every month into your pension will make a significant difference over its lifetime. Again, every additional contribution you make benefits from tax relief and compound interest growth.
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| Photo credit Towfiqu Barbhuiya via Unsplash |
3. Stick with your workplace pension.
Around 8% of the value of your salary gets invested in your pension. Your pension funds consist of contributions from not just yourself but your employer too. If you were to opt out of your workplace pension, you would not receive these employer contributions. Therefore, stick with your workplace pension. Otherwise, you are turning down free money.
4. Check that your pension remains suitable.
As your life changes, you will want to check that your pension remains suitable to the aspirations you have for your retirement. High charges and poor performance could be eroding your pension fund or preventing it from growing at its full potential. Regularly checking its performance will allow you to take any corrective action you need to keep it on track.
5. Keep your pension going for a bit longer.
Continuing to work a few years beyond your planned retirement age will allow you to continue contributing to your pension pot. Doing so can make a big difference to your retirement funds when you need them most. Also, during the extra years of work, your contributions will continue to qualify for tax relief and benefit from compound interest growth.
Other factors that will influence your time and date.
Extended working lives.
In general, people are working longer than they used to. Today, the number of people aged between 60 and 64 who are still at work has risen considerably. Also, there are now almost twice as many women, and around 14% more men employed today compared to 1998. For those aged 65 to 69, approximately 15% more men are still employed compared to 10 years ago.
Rising State Pension age.
The age at which people can draw their State Pension is rising. For the first time since its introduction, the age at which both men and women draw the pension is 65. Despite qualifying for the pension at this age, almost half of working women intend to remain employed until at least 67.
The full State Pension is £179.60 per week. If you do not believe this will be sufficient to sustain your retirement lifestyle, you should consider putting other financial plans in place.
Pension flexibility.
New pension regulations introduced in 2015 mean you now have greater flexibility in how you access your pension funds. In many cases, you can access up to a quarter of your pension funds as a tax-free lump sum from the age of 55.
You can also access the remainder as taxable lump sums or leave them invested in your pension fund. Although this flexible access may appear appealing, taking too much cash could leave you short of income when you retire.
Therefore, before making any decisions regarding your pension, you should seek financial advice from an independent financial advisor.
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