It can be difficult to prepare for retirement during your career. However, thinking about your retirement early is critical to ensure that you save enough to support yourself for the rest of your life. Following this guideline will help you make the right decisions when preparing for retirement:
1. Seek Financial Advice
If you are worried about the amount that you have saved for retirement or want to know how you can save more before you reach retirement age, then you should consider seeking the advice of a financial advisor. Not only will they help you to track your savings and pension performance, but they can help to improve the way that you save for the future.
2. Add to Your Retirement Fund
Throughout our lives, it may not be possible to save continuously. Therefore, when you have the means and ability to save, you should attempt to bulk your retirement fund out. Every pension scheme gives you the ability to make one-off and additional payments to your account.
3. Check Your Pension Growth
While you may believe that your pension will continue to grow, due to inflation, interest rates and pension performance, your pot may not be increasing by the amount that you want. If this is the case, you should consult a financial advisor for a pension review or check with your pension scheme.
4. Don’t Opt-Out of Your Workplace Pension
Many people make the decision that receiving the short-term benefits of opting out of your pension scheme is advantageous. However, if you are 22 and earn over £10,000, by opting into a workplace pension scheme, you will gain automatic contributions from both yourself and your employer, who will have to match the amount that you pay in.
5. Get Your State Pension
You will gain a state pension if you have worked for 35 years and contributed to National Insurance in some respect during this time. If this is not so, or if you are self-employed, you should make voluntary National Insurance contributions to ensure that you receive this.
6. Access Your Old Pension Schemes
Even if you are not currently contributing to them, it is likely that you started a workplace pension with any other jobs you have held in the past. If this is the case, then you should find out how well these are performing as it could be losing you potential funds towards your pension through stagnating growth.
7. Receive Your Tax Relief
Tax relief can be extremely advantageous for your pension scheme. Tax relief can be claimed on your pension by your employer or by your pension scheme, depending on the nature of your scheme. If you pay higher tax rates, you should claim this directly through the HMRC.
8. Carry Annual Allowance Over
You can only pay in £40,000 into your pension scheme over a year from both you and your employer. To avoid tax charges, you can carry over your annual allowance from the past three years if you have gone over the limit of £40,000 in a single year.
If you were wondering how best to prepare for retirement, taking the above simple steps, as recommended by pension advice experts Portafina, will ensure that you have enough savings to see out your days.
