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Taking the time to take back control over retirement savings
With all that has been going on in the world this year, it’s been challenging for many people to feel as though they’re in control of much. However, some people have been in the fortunate position of taking the opportunity to invest in their physical and emotional health while in lockdown.
Worryingly, though, research suggests that some people might have overlooked their future financial health[1] as a result of the coronavirus (COVID-19) outbreak. So as life begins to normalise, now is an excellent time to take back some of that control, starting with retirement savings.
TIME TO REVIEW AND BETTER ORGANISE FINANCES
Establishing financial security is essential, but it doesn’t happen overnight. We must cultivate good financial habits over our lifetime to grow and maintain our retirement nest egg. All of our financial decisions and activities ultimately affect our financial health.
Of those who spent the months of lockdown working from home, some might have been able to make financial savings as a result. Some employees, including furloughed employees, will have been entitled to employer pension contributions that may now need reviewing. People entering or approaching retirement in 2023 should carefully plan how and when to access their pension to maximise annual allowances and tax-free benefits.
MORE BADLY ORGANISED THAN BEFORE THE PANDEMIC
According to the research findings, 21% of people have taken the time to review and better organise their finances since the pandemic’s start. The younger generation of 18-34-year- olds (31%) were more likely to have managed their finances than those aged 35-54 (22%) and 55+ (13%), while men (23%) were more likely to have done this than women (19%).
Just 9% said that they hadn’t reviewed their finances and were more badly organised than before the pandemic. This was much more likely among men (42%) than women (32%) and also more common among the younger generations, with 49% of 18-34-year-olds compared to 36% among 35-54-year-olds and 28% of over-55s.
10 TIPS TO ENJOY THE RETIREMENT YOU WANT
For the past six months, understandably, people have been focused on the short term, and many may have neglected retirement savings.
- Review your spending habits and consider if you
- have the scope to save a little more each month.
- Look up your annual benefit statements – you may have saved with more than one employer’s pension scheme.
- Consider what financial milestones you’d need to reach to increase your pension contributions and review your investment choices.
- Find out more about your current pension plan. If you pay more, does your employer match your contributions?
- Track down old pension schemes using the Government’s finder service https://www.gov. UK/find-pension-contact-details or request contact details from the Government’s Pension Tracing Service on 0800 731 0193 or by post.
- Check your Expression of Wish form is up to date. This request sets out who you would like to receive any death benefits payable on your death.
- Check your State Pension entitlement. To receive the full State Pension when you reach State Pension age, you must have paid or been credited with 35 qualifying years of National Insurance contributions. Visit the Government Pension Service https://www.gov.uk/contact-pension- service for information about your State Pension.
- Add up the savings and investments that you could use for your retirement. A pension is a very tax-efficient way to save for retirement, but you might also have other savings or investments that you could use to increase your income when you retire.
- If you’re getting close to retirement and the amount you’re likely to retire on is less than you’d hoped, consider ways to boost your pension.
- Decide when to start taking your pension. You need to set a target date when you want to start drawing an income from your pension
- and remember, you don’t have to stop working to take your pension, but you must be aged at least 55 (you might be able to do this earlier if you’re in very poor health).
SAVING NOW SO YOU CAN SPEND LATER IN LIFE
If we’ve learnt anything from this COVID-19 pandemic, it’s the importance of financial resilience, including having savings for later life. You need to save now so you can spend it later in life. And making plans now for how you will pay the bills later when you are no longer working will avoid panic when you suddenly find yourself retiring.
Source data:
[1] Aegon research with Opinium surveyed 2,000 adults between 15 and 19 May 2020
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