Why checking your State Pension forecast can help you prepare for retirement


Person working something out on a calculatorRetirement is traditionally seen as the time to relax and enjoy the rewards of your lifetime of hard work. For this reason, it’s important that you have enough wealth to support your desired lifestyle throughout.

If you’ve ever worried that you won’t have enough, you aren’t alone. According to a study by Aviva, more than half of people in the lead-up to retirement are concerned that they won’t have enough money for a comfortable lifestyle.

When it comes to planning your finances in retirement, it’s important to be able to make informed decisions. Here’s why checking your State Pension forecast can help you prepare.

The State Pension provides steady income, which rises at least in line with inflation

In recent years, many people are living longer due to better lifestyles and improvements in medicine. To reflect this change in longevity, the government periodically raises the age at which you can access your State Pension.

In the 2021/22 tax year, it currently stands at 66 but there are plans to increase it to 67 by 2028 and 68 by 2046.

If you want to know when you’ll be eligible to claim your State Pension, you can use the government website to find out more information.

If you are eligible for the full amount, you can receive £179.60 per week for the 2021/22 tax year, although this is likely to rise in future.

One of the biggest benefits of the State Pension is that it is typically protected by the “triple-lock”. This is a government pledge that ensures the pension rises by the highest of these three different measures:

  • The rate of inflation
  • The increase in national average wages
  • 2.5%

However, it’s important to be aware that the government have announced that due to economic distortions caused by the coronavirus pandemic, they will be suspending the triple lock for one year. Instead, the State Pension will rise by the highest of either the rate of inflation or 2.5%.

After that period, however, it is likely that the triple lock pledge will return.

To be eligible for the full State Pension, you need 35 years of National Insurance contributions

While you may have other income from private pensions, the State Pension can be considered to be the bedrock of your retirement planning. That’s why it’s important to ensure that you’re eligible for as much as you deserve.

To receive the full amount of State Pension, you will need to have 35 years of National Insurance contributions (NICs). A qualifying year can include years where you were:

  • Employed and earning more than £183 a week from a single employer (though you may still get a qualifying year if you earn between £120 and £183 from one employer)
  • Self-employed and were paying NICs
  • Claiming jobseeker’s allowance or Employment and Support Allowance
  • Getting Carer’s Allowance
  • Claiming Child Benefit for a child under the age of 12 (or 16 before 2010).

If you’re unsure whether you have the full number of qualifying years, you may benefit from checking the government website to find out your State Pension forecast. This will tell you how much you are eligible for and when you can access it.

This can be useful for finding out ahead of time whether you can get the full amount. If you have any gaps in your National Insurance contributions, such as time that you spent out of work while you were unemployed, you can often fill these with National Insurance Credits.

While some of these credits are added to your record automatically, you need to apply for others. This is why it’s important to check your forecast, so that you can ensure that you have a full contribution history.

Working with a financial adviser can make retirement easier and simpler

If you want to be able to retire with confidence that you have enough wealth to support your desired lifestyle in retirement, you may benefit from seeking professional financial advice.

A financial planner can help you to clearly assess your finances as you approach retirement, which can help you to know whether you need to increase your pension contributions or reconsider your desired lifestyle.

They can also help you to ensure that you’re eligible for the full amount of State Pension by working with you to make sure you have enough years of National Insurance contributions.

Working with a financial planner can help to give you greater peace of mind and financial security, enabling you to retire with greater confidence that your desired lifestyle is comfortable and sustainable.

Get in touch

If you want to know more about how the State Pension can play an important role in your retirement, get in touch. Please email info@investmentsense.co.uk or call 0115 933 8433.

Please note

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.