According to a survey by insurance provider Aviva, more than half of Brits are concerned that they won’t have enough income in retirement to support a comfortable lifestyle. This is an understandable fear, as this time is typically seen as an opportunity to relax and enjoy the rewards of your lifetime of hard work.
If you don’t have enough income in retirement, then you may find that your desired lifestyle is not financially sustainable. If this is the case, you may need to lower your standard of living, which can cause unnecessary stress.
Thankfully, there are some things that you can do if you’re concerned about this prospect. Read on for five ways to ensure that you have enough income in retirement.
1. Make sure you’re saving enough
If you’re concerned that you won’t have enough in retirement, then one of the easiest ways to remedy this is to increase your contributions into your workplace pension. One of the benefits of this is that many employers offer to increase their own contributions in line with yours, up to a point.
If your employer offers this benefit then this can be a good way to save more for retirement, as it effectively doubles the value of your contribution increases.
If you want to save more, as well as contribute more, you may also want to make sure that you’re maximising your ISA allowance. Since you don’t have to pay Income Tax or Capital Gains Tax on the growth on an Individual Savings Account, this is a tax-efficient way to save.
2. Make sure you’re eligible for your full State Pension
While you probably have considerable private pension savings, your State Pension can also be a valuable source of income in retirement. It may not be as lucrative as some pensions you may hold, but since it is guaranteed to rise in line with inflation, it can be considered the bedrock of your financial planning in retirement.
To be eligible for the full amount, which stands at £179.60 per week for the 2021/22 tax year, you need to have 35 years of National Insurance contributions.
If you have any gaps in your record, such as time spent out of work while you were unemployed or raising children, you can fill these in with National Insurance credits. While some are usually added to your record automatically, you need to apply for others.
If you want to find out if you’re eligible for these credits, you can check the government website to find out more.
3. Consider consolidating old pensions
If you’ve had several previous employers, you may have more than one workplace pension. If this is the case, it can be easy to lose track of them.
The risk of this is that you may be leaving a portion of your wealth to languish in an underperforming fund, meaning that they may not be growing your money as effectively as you like. This can pose problems in retirement when you come to withdraw it.
However, there can be some drawbacks to this so it’s important to think carefully about whether consolidation is right for you. If you want to know more about consolidating pensions, read our previous article to find out the pros and cons of doing so.
4. Track down old pensions
Another potential issue with having a variety of workplace pensions is that it can be easy to forget about them entirely, particularly if they’re small. This is obviously an issue as they could help to contribute to your income in retirement.
To make sure that you’ll have enough income in retirement, it can be important to make sure that all of your pensions are working for you. If you need help to find an old workplace pension, you can use the government website to find them.
5. Speak to a financial planner
If you want to ensure that your pension provisions will be enough to support your desired lifestyle throughout retirement, you may benefit from speaking to a financial planner.
Working with a professional can help you to determine how much you need to save in order to meet your financial goals. If you don’t have enough to support your desired lifestyle in retirement, they can also help you to manage your money more effectively to grow it.
One of the main benefits that working with a planner can bring you is the confidence that comes with being able to make informed decisions.
According to a 2019 report by the International Longevity Centre, clients who sought financial advice were better off by £47,000 on average over a period of 10 years, of which £31,000 was additional pension wealth.
The reason for this improvement was that clients felt more able to take risks when growing their wealth, due to the confidence that professional advice had brought them.
Working with a financial planner can be a great way to gain more financial peace of mind, knowing that you’ll be able to enjoy a comfortable lifestyle in retirement.
Get in touch
If you want to ensure that you have enough for a comfortable and sustainable lifestyle in retirement, get in touch. Please email firstname.lastname@example.org or call 0115 933 8433.
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.