Financial health & wellbeing

Online pension guide

Online pension guide

 

Are you retirement ready? – Plan your pension at any age!

Thanks to auto-enrolment more people are saving into a pension than ever before, but it still takes a bit of foresight and financial planning to ensure you have enough to live on in old age. It’s never too early and it’s never too late to think about pensions.

Check out our top tips to help you plan your pension whatever stage of life you’re at!

In your 20s

A lady with a piggy bank saving for her pensionTime is on your side! It’s great that you’re thinking about pensions early. If you start young compound interest means that small contributions can grow into much larger gains. With the state pension changing all the time, and many not sure that it will even exist by the time today’s 20-somethings retire, it’s important for you to start building up a private or workplace pension as early as possible.

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Time is on your side! It’s great that you’re thinking about pensions early. If you start young compound interest means that small contributions can grow into much larger gains. With the state pension changing all the time, and many not sure that it will even exist by the time today’s 20-somethings retire, it’s important for you to start building up a private or workplace pension as early as possible.

Top tips:

Check out your company’s pension scheme – Auto-enrolment means that you’ll automatically be placed into a workplace pension if you’re over 22 and earn more than £10,000 pa. If you don’t meet this criteria you can still ask to join your company’s workplace pension scheme. 

Some companies will have schemes that are more generous and will match you at higher rates, in which case you might want to up your contributions. Experts say that a 25 year-old would have to pay in a total of £190/month in order to achieve a £19,000/year retirement income at 66.

Don’t opt-down!It’s estimated that a 25-year-old on an average salary who saves the full 8% combined auto-enrolment contributions could achieve a final pension pot of £327,000. If they opt down to 1% contributions, however, that pot would only grow to £56,000. So try to avoid the temptation to opt-down when contributions rise again next April – your future self will thank you for it!

Don’t forget about your pension if you’re self-employed!A third of self-employed people over 55 have no pension savings. If you’re young and self-employed or working in the gig economy you have time to learn from their mistakes. For advice on setting up your own pension check out this article from the Money Advice Service.


In your 30s

Your 30s is a time of multiple competing financial pressures as people tend to settle down, buy a house and start a family. It’s important to work out how you’re going to juggle these different priorities without neglecting your pension.

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Your 30s is a time of multiple competing financial pressures as people tend to settle down, buy a house and start a family. It’s important to work out how you’re going to juggle these different priorities without neglecting your pension.

Top tips:

Save up an emergency fund – With all these financial pressures it’s important to have a buffer to fall back on should you lose your job.  Before you plow extra money into a pension, set aside about 6 months worth of earnings into an easily accessible account.

Increase your contributions as your salary increases – Hopefully you should see some good wage growth during your thirties, with women reaching peak earnings in this decade. Once you have an emergency fund, start increasing your pension contributions every time you get a pay rise instead of putting it all into lifestyle inflation. You can’t miss what you’ve never had and it might also help to reduce your tax bill.

Don’t forget about your pension when raising a family –  If you’re staying at home to raise children it’s important to register for child benefit whether you claim it or not. This will ensure that you continue to build up NI tax credits so you don’t miss out on the state pension. You can check your national insurance record here. If one parent is staying at home raising children the working partner might also consider paying into a pension for them.

Check out this article for lots of helpful pension advice for married couples. Pensionbee also has some good pension tips for stay-at-home parents.


In your 40s

It’s not too late to start saving! By this age you should be taking serious interest in your pension. If you haven’t started yet you can still set aside enough for a comfortable retirement with a bit of sacrifice.

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It’s not too late to start saving! By this age you should be taking serious interest in your pension. If you haven’t started yet you can still set aside enough for a comfortable retirement with a bit of sacrifice.

Top tips:

Check your pension pots – By your 40s you will have probably collected quite a few pension pots from different employers. If you haven’t done so already now’s the time to chase them down and see how they’re doing. There is currently about £400 million worth of savings sitting in unclaimed pension pots! You can trace yours using this guide. Depending on your circumstances you might want to combine your pensions pots and set up a SIPP (Self-invested personal pension). Check out this article for more advice.

Make sure you’re on track – Once you’ve located all of your pension pots you can work out what kind of income you’re projected to make in retirement. Try this calculator from PensionBee to see where you’re at. If you’re coming up short you might have to reassess your budget so that you can save more. Our budget calculator can help you with this.  

Diversify your savings – Pensions aren’t the only way to fund retirement. It’s good to have a variety of income sources in old age so think about what else you can set up. Maxing out the £20,000 limit on an ISA is a good start and will give you more flexible access to your money than a pension. You might also want to start investigating passive income streams, for example setting up a small online business or investing in a rental property. If you start to work on passive income projects now they’ll have time to develop into a stable income by the time you retire.


In your 50s

In your 50s retirement doesn’t look nearly as far away as it did in your 20s! Many choose to bury their head in the sand with 24% of over 50s relying on an inheritance to afford a comfortable retirement and a worrying 13% hoping for a lottery win. Be prepared for retirement by following our tips.

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In your 50s retirement doesn’t look nearly as far away as it did in your 20s! Many choose to bury their head in the sand with 24% of over 50s relying on an inheritance to afford a comfortable retirement and a worrying 13% hoping for a lottery win. Be prepared for retirement by following our tips.

Top tips:

Work out your life expectancy – Over 50s tend to underestimate their life expectancy by up to 8 years which can cause them to run out of money too early! Try this handy calculator to work out how long you might have to live in retirement. Once you have an age to work with, make sure that your pension plans will keep you funded throughout your old age.  

Think before you raid your pension fund – Since pension freedoms were introduced in 2015 people have been able to access their pension fund from age 55 and withdraw 25% tax free. Before you raid your fund to buy a lamborghini, take a moment to think about what the best financial decision is for you.  Check out the government’s Pension Wise service for free and impartial pension advice.

Beware pension scams – Last year pension scam victims lost £91,000 each on average. Since the introduction of pension freedoms gave people access their pension pots at 55, scammers have increasingly targeted this age group. Don’t give away decades worth of savings to a scammer. Reject any unsolicited calls or emails offering a free pension review and if a deal sounds too good to be true it probably is. Remember: before you change your pension arrangements check the FCA Register to make sure the company you’re dealing with is reputable.


In your 60s

The state pension age currently 65 for men and 63 for women (increasing to 65 in November). However, many people in their 60s continue to work past retirement age either out of financial need or because they enjoy their work. Whatever your plans, when the time comes to draw your pension there are a few things you should think about.

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The state pension age currently 65 for men and 63 for women (increasing to 65 in November). However, many people in their 60s continue to work past retirement age either out of financial need or because they enjoy their work. Whatever your plans, when the time comes to draw your pension there are a few things you should think about.

Top tips:

Shop around – When deciding on how to receive your pension don’t automatically accept the annuity offered by your provider. Shop around to find the best rates and don’t forget to declare any health and lifestyle issues (e.g. smoking or diabetes) which could lead to a higher income. You might want to consider using your pension pot for a drawdown income instead of buying an annuity. To find out more about the pros and cons of these two types of pension check out this guide from the Pension Review Service. You can also try this income drawdown calculator to see how long your pension pot might last.

Get a benefits check – Each year £3.5 billion worth of benefits go unclaimed by older people. If you’re struggling in retirement it can’t hurt to check if you’re eligible. Try out our benefits calculator to see what you could claim.

Death and taxes – The way in which you use your savings can have a big impact on the amount of tax you pay. Nobody wants to think about death but it is also important to consider inheritance tax and what will happen to your pension and other savings after you die. Check out the This is Money guide for advice on how to be tax efficient during retirement.


Speak to us

Whatever your age it’s important to plan for your retirement. By keeping track of your savings over the long term and planning ahead you can avoid pension poverty and enjoy your golden years in comfort.

If you work in automotive and are worried about money or are struggling in retirement you can contact us for support: https://ben.org.uk/need-help-now/