Regardless of your age, retirement planning is likely to be a top priority when it comes to your financial goals. After all, you don’t want to leave it too late and discover that you haven’t saved enough to support your dream lifestyle.
If you aren’t feeling certain about your retirement, then you’re not alone – according to MoneyAge, 64% of UK adults don’t feel confident about their retirement, while 36% feel anxious about planning for later life.
Thankfully, there are some steps you can take to reinforce your certainty for the future and ensure that you’re on track towards your saving goals. Continue reading to discover five practical ways to boost your retirement confidence.
1. Start planning now
When you’re young, your savings goals are likely to be more immediate, and retirement is often seen as more of an afterthought.
Though, the earlier you start planning and saving for retirement, the better, as you may start feeling more confident about the future if you know you’ve adequately prepared. Nest gives an interesting example showing the benefits of early saving.
Imagine two people started making £200 monthly contributions to their pension over 10 years, totalling £24,000 each. However, person one makes their contributions between age 22 and 32, while person two makes theirs between 32 and 42.
Assuming both people received investment returns of 5% each year until the age of 60, person one would have nearly £125,000 saved, while person two would only have around £77,000.
Even though they saved the same amount, time and compounding returns means the person who started saving earlier has more in their pension pot overall.
If you’re still unsure how much you need to save for retirement, it can be beneficial to sit down with a financial planner and carefully think about what you want to do when you stop working. You can then determine roughly how much this would cost, and save accordingly.
2. Review the investments held in your retirement fund
It may also be worth reviewing the assets in your pension to ensure you’re still on track to meet your retirement goals. This is because it’s much easier to understand whether you’re on track when you know exactly how much is in your fund.
Despite this, Standard Life reports that 75% of UK adults don’t know how much is in their pension pot. When you know how much you have invested in your pension pot, you can use this figure to reassess your saving goals.
For instance, you can check what you currently have in your pension fund, then work out the sort of lifestyle this could afford in retirement. If, after reviewing your fund, you think you haven’t saved enough, this could inspire you to make lifestyle changes to accommodate extra savings, such as cutting back on unnecessary expenses.
There may have even been legislation changes since you last examined your portfolio, which means you need to make alterations. For instance, the pension Annual Allowance has increased in the 2023/24 tax year, giving you the opportunity to make the most of even more tax-efficient growth.
3. Keep track of your old pension pots
If you’ve worked for several different employers in your life or have ever started your own pension, you could have several retirement funds scattered across different companies or providers.
This may be more common than you think, as Zippia reports that the average person holds around 12 jobs in their lifetime. This can make it easy to overlook or “lose” one of your pension funds.
As such, it’s worth tracking down your old pension pots to ensure you’re maximising your retirement income.
Since your pension provider generally sends you a statement each year, you can use this as a starting point. If you know which provider your pension was with, you can contact them and ask for details, such as the value of your pot and how much it’s likely to provide when you retire.
Similarly, to trace a workplace pension, your first point of contact should be with your old employer, as they should be able to direct you towards your missing pots.
Or, if you’re still struggling to track down your old pensions, you can always use the government’s Pension Tracing Service, a database of workplace and personal pensions that can be used to help you find pensions you have lost track of.
Considering that Unbiased reports there is more than £19 billion total lost in forgotten pension pots in the UK, each with an average size of £13,000, finding an old scheme could give your retirement savings the boost needed to help you feel confident about the future.
4. Ensure you’re eligible for the full State Pension
The State Pension offers a valuable, guaranteed income that will likely provide you with the bedrock of your retirement income. The regular, index-linked income could be used to pay for your essential expenses, while your other pension wealth could pay for your dream lifestyle.
As of the 2023/24 tax year, the new full State Pension is worth £203.85 a week, or £10,600 a year, and to be eligible for this, you must have a certain number of “qualifying years”. You can accrue these by making National Insurance contributions (NICs) through work, or some other methods, such as receiving some benefits or caring for a child.
You must have at least 10 years to qualify for any State Pension, or 35 years to be eligible for the full State Pension.
If don’t have the full 35 qualifying years – for example, from missing work due to an illness or taking time off work to raise your children – you may miss out on the extra income the State Pension provides. So, it may be worth obtaining a State Pension forecast to determine how much you’re entitled to, and whether there are any gaps in your record.
If you find gaps, you can typically make up to six years’ worth of missed NICs, and it typically costs £907.20 to top up a missing year. For every additional NIC you make, your State Pension would increase by £303 a year, which equates to more than £6,000 over a 20-year retirement.
Taking steps now to ensure you maximise your State Pension entitlement gives you the reassurance that you’ll receive this valuable income once you reach State Pension Age.
5. Work with a professional
Working with a professional can help you to understand your progress towards your retirement goals, and whether you’re on track to achieve the retirement you want.
In fact, Standard Life reports that people who work with a financial planner believe they’ll be able to fund their retirement lifestyle for six more years than those who didn’t take advice.
We can help you devise an in-depth retirement plan to ensure you’re saving enough and won’t end up with a shortfall.
And, since we qualified for VouchedFor’s 2023 Top Rated Firm guide, you can be sure that we’re an award-winning financial planning company that provides an excellent level of advice and service.
Please call 01992 500261 or fill in our online contact form to organise a meeting and find out how we can help you prepare for your future.
The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Levels, bases of and reliefs from taxation may be subject to change and their value depends on the individual circumstances of the investor.
Workplace pensions are regulated by The Pension Regulator.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future results.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates and tax legislation may change in subsequent Finance Acts.