You are here: Home - Retirement - Retirement planning - News -

Ten ways to be richer in retirement

0
Written by: YourMoney.com
28/12/2018
The experts at financial advice firm Chase de Vere share their tips for increasing the size of your pension.

Make the most of your workplace pension scheme

It makes sense for most employees to join their company pension scheme. These schemes are usually good value and all employers have to pay into their eligible employees’ pensions through auto-enrolment.

You should find out how much your employer will pay into your pension and if they will increase this amount if you pay more yourself. If they will, this should be a very strong incentive for you to invest more.

Start saving as soon as possible

Although it may seem like a long way off, the sooner you start saving the easier it will be to give yourself a more comfortable lifestyle in retirement. Even if you cannot afford to save much initially it is better to do something than nothing at all.

The money you invest first will be invested for the longest and so has the best chance to grow. For example, if you invest £100 and it grows at 6% each year, after 10 years it is worth £179, after 20 years it is worth £321, after 30 years it is £574 and after 40 years it has grown to £1,029.

Increase your pension contribution when you get a pay rise

While you might only be able to invest a smaller amount initially you need to actively increase this as you get older, otherwise the effects of inflation mean that in real terms you’ll be investing less and less over time.

Look to pay in more as your salary goes up and also as you get older and you might have lower living expenses, for example when children leave home or mortgages are paid off.

Take more investment risk when you are younger

When you are younger and have a long period until your retirement date you can afford to take more risk with your investments especially if you’re investing monthly amounts, which most people will be.

Investing in shares is likely to give you the best long-term returns, although as your pension fund gets bigger and as you get closer to retirement you should hold more money in other assets such as cash, fixed interest and property, as capital protection will become as important as capital growth.

Have a pension and ISA

For most people the best approach for long-term savings is a combination of pensions and ISAs. Pensions provide initial tax relief which give your savings an immediate uplift, whereas ISAs can still be tax efficient and you are able to access your money whenever you like.

Keep an eye on under performing funds and high fees

It is important that you review your pensions, ISAs and other assets you’ll be relying upon in retirement on a regular basis. You should get a statement from your provider either annually or every six months, which will give you an up-to-date valuation, it is also possible to check the performance of many plans online.

Make sure you know how your investments are performing and if they are underperforming understand why and if it is likely to change.

If you don’t have expert investment knowledge, then stick with diversified investment funds such as multi-asset funds.

Also make sure you aren’t paying too much in charges. You need to understand how much you are paying your product providers and how much you are paying on any underlying investment funds.

Tracker funds are low cost investment options which can provide broad exposure to stock markets.

Understand your entitlement to the State Pension

Find out what State Pension you could be entitled to and when you are likely to receive it. If you’re not going to receive the full State Pension then see if there is anything you can do to boost this, such as making extra contributions.

You can request a State Pension statement from www.gov.uk/check-state-pension or by calling 0800 731 7898.

How will you take an income from your pension?

As you get older, you need to give some thought to how you’re going to generate an income in retirement. Pension freedom rules mean that many people won’t simply buy an annuity with their pension pot.

If you’re planning to remain invested while taking an income from your pension this will affect your investment strategy.

You could, for example, retire at age 65 but then live for another 30 years or more. This means that if you take too much investment risk or make high levels of withdrawals you could run out of money, whereas if you take too little risk the value of your pension is likely to be reduced by the effects of inflation.

Ignore Brexit

There is lots of noise about the possible implications of Brexit as we move into 2019. However, this shouldn’t be used as an excuse to delay your retirement planning.

Nobody knows how Brexit will play out, although that is just about the same with everything else in life.

Historically, times of uncertainty have often proven to be good times to invest, when prices are depressed and people are sitting on the sidelines.

Take independent financial advice

Many people should take independent financial advice. Retirement planning can be complex, and getting it wrong could have a huge impact on your standard of living, so it’s important to make sure you’re on track to achieve your retirement goals.

It is particularly important to take independent financial advice when you are taking pension benefits, if you remain invested while taking an income or if you have a larger fund which you are relying on.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The five financial risks threatening retirees in 2019

Wealth management group Sanlam has identified five key risks for those at or nearing retirement in 2019
The five financial risks threatening retirees in 2019

Where are the best investment opportunities for 2019?

With 2019 fast approaching, we asked some of the UK’s leading fund managers to highlight the stocks they are w...
Where are the best investment opportunities for 2019?

Half a million may need to retake driving test under no deal Brexit

Up to half a million expats living in France and Spain may be forced to retake their driving test in those cou...
Half a million may need to retake driving test under no deal Brexit

Ryanair jetting towards US flights for £10

Ryanair is on course to achieve its long-held ambition of offering transatlantic flights to the US – and the...

Investing in car parks: a good vehicle for income seekers?

As the search for income continues, many investors are turning to alternatives, with car parks becoming increa...

A quick guide to guarantor loans – in association with Guarantor Loan Comparison

Considering a guarantor loan or becoming a guarantor yourself? Read our essential guide...

Results round-up: Companies to watch this week

Mulberry and more will face the music this week.

Product launches of the week

Select Property Group, Schroders, Leeds Building Society and more have exciting news this week.

Money Tips of the Week

Read previous post:
worried mortgage customers
Four mortgage tips for 2019

With Brexit on the horizon, 2019 will certainly be an interesting year for your finances, and while it’s difficult to...

Close