How Can Savers Boost Their Retirement Savings in 2021?
Keeping track of pension pots is demanding at the best of times. With another unusual year upon us, how can we get a grip on our retirement savings?
Andrew Megson, executive chairman of My Pension Expert, offers his advice to savers aiming to get the most out of their finances for retirement.
The beginning of the new year has been just as turbulent as the one that came before it. Indeed, COVID-19 cases and hospital admissions are increasing once more, consequently driving the UK into its third lockdown since the beginning of the pandemic.
Yet despite this sombre start to 2021, the arrival of a new year presents marks a fresh start for individuals everywhere, with many taking the opportunity to better themselves – especially when it comes to the state of their retirement finances. After all, January remains a popular time for older members of the workforce to consider setting their retirement date.
Inevitably, many people are wondering what they can do to ensure that their pension pot remains in good health. So, here are some pension planning tips worth considering in the new year, to help savers secure a relaxed and financially secure retirement.
Devise a suitable retirement strategy
It might seem like a fairly elementary suggestion to make, but developing a sustainable retirement plan is a vital factor many adults dismiss. According to a recent My Pension Expert survey of over 900 UK adults aged 40 and over, a staggering 42% admitted that they had no clear retirement strategy in place.
In these circumstances, it is vital to seek some independent financial advice. An adviser will be able to offer a helping hand when it comes to devising a retirement plan that suits their client’s specific needs.
It might seem like a fairly elementary suggestion to make, but developing a sustainable retirement plan is a vital factor many adults dismiss.
Take the hassle out of savings
We are all inundated with a million and one things to do during the working week, so often the subject of pension contributions is left in the sidelines. As such, individuals should consider how they can make saving for retirement as hassle-free as possible.
If you have a workplace pension, this shouldn’t be too tricky. The way this usually works, employers simply deduct an agreed sum from an employee’s salary to count as their pension contribution. The result is that this is an easy process, unless individuals want to increase their contribution at any time.
Alternatively, those with a personal pension should consider setting up a direct debit to replicate this process. In this way, contributions can be made with minimal effort.
Tracking down old pension pots
In today’s increasingly fluid jobs market, it is common for individuals to have worked for up to 10 (or more) different companies throughout their career. So, by the time an individual has reached retirement age, they will have amassed a number of pension pots. As a result, it can be easy to lose track; indeed, nearly a third (31%) of UK adults aged 40 to 54 have lost track of their pension pots, according to recent research from My Pension Expert.
To make things simpler, the government offers a helpful tracking tool, which should go some way to help pension planners locate their missing pots. Although at the moment the service cannot tell individuals the total value of the pension pots that they have accumulated, it does provide users with the contact details of their provider.
Shopping around for the right option
The world of pensions can seem like difficult terrain to navigate. Consequently, many savers fail to shop around for a pension provider, instead settling for one that does not suit their needs. However, there are plenty of different options available; consumers just need to make a habit of conducting their own research. After all, pension planners are able to transfer their pension pot at any age, so there’s no need to put off conducting research until a later date.
However, some pension providers will impose fees on clients who transfer their funds, so this is something to keep in mind if you’re thinking of changing providers. Savers should always ensure that you read the small print to see if this is the case or seek independent financial advice if they are unsure.
Keep an ear to the ground
Ultimately, planning for retirement can be complex – particularly in the current climate, where economic turmoil and changing markets are complicating matters even further. With further changes expected to pension policies, tax relief, the triple lock system, and even the potential for negative interest rates, it might seem more difficult than ever to get a handle on retirement finances.
So, it will be beneficial for savers to make a conscious effort to keep up with the latest pension news, and potential changes to pension policies in the new year. In this way, savers are less likely to be in for a shock if any changes are made, and will be able to adjust their retirement strategy accordingly, which should make for a more financially secure retirement. As policies can often be quite complex, savers shouldn’t be afraid to ask for a helping hand if they need some assistance cutting through the jargon.
While 2021 hasn’t been smooth sailing thus far, this doesn’t have to be the case for people’s pensions. After all, there is no time like the present for savers to strengthen their pension pots, and achieve some peace of mind amidst all the chaos.