Pensions and savings: Interactive Investor expert gives her advice
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Making pension saving a priority could help people take control of their retirement when the time eventually comes. Sarah Pennells, Consumer Finance Specialist at Royal London, shared some tips on how people can maximise their pension savings and take control of when they retire.
She said: “Many people drift into retirement rather than planning for it, but it’s really important to think about when you want to stop work and how much you’d need to save into a pension in order to do that.
“The earlier you start, the longer your pension savings have to grow, and the bigger your pot could be.
“Even if you love your job, having a decent sized pension pot could give you the financial independence to pay your bills without having to carry on working.
“The state pension is currently £9,339 a year, which isn’t enough to give most people the kind of retirement they’d like, so it’s important to consider a workplace or personal pension as an additional source of income in retirement.”
Ms Pennells urged Britons to utilise their workplace pension as a means of building up their retirement pot.
She explained: “If you’re in a workplace pension, there may be ways you can pay a bit more into your pension.
“For example, a number of employers will match employees’ pension contributions beyond the minimum they have to pay in under automatic enrolment rules, up to a certain limit.
“That means that when you pay extra into your pension, your employer will pay in as well. If you get paid a bonus, you may be able to exchange some or all of your bonus for contributions into your pension instead.”
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Here are some of Ms Pennells’ additional tips on how Britons can maximise their retirement savings:
Shift your mindset
“Instead of thinking of saving for your retirement as ‘giving up’ money today, think of it as helping you to live the life you want when you stop work.”
Save spare cash towards retirement
“Check your bank statements or online banking app to see where your cash is going and whether you can cut back.
“A few pounds here and there will help towards your retirement pot.”
“Retirement may feel like a long way away – until suddenly it’s upon you.
“So take some time to look at what you’re currently saving, how much that could give you in retirement and whether there’s a gap.
“Use online calculators such as those on the Government-backed Moneyhelper.org.uk website.
“If you’re aged 50 or over, you’re entitled to a free pensions guidance call with Pension Wise.”
Do not miss out on the state pension
“You may not get your state pension until you’re in your late 60s, but it will be a key part of your income in retirement.
“You can find out your state pension age on the Gov.uk website, and it may be possible to plug any gaps in your National Insurance record, if it will increase your state pension amount,” she explained.
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