Make the most out of your retirement – tips to help you ‘comfortably retire’
Scottish Widows advise on pension savings and retirement
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Romi Savova, CEO of PensionBee said: “For many workers, a happy retirement holds the promise of spending more time doing the things they enjoy – whether that’s seeing friends and family, pursuing a new adventure, or simply relaxing.” Ms Savova gave her advice on the best tips to ensure savers can retire comfortably.
The first tip she gave was consolidation is key.
She said: “The Department for Work and Pensions predicts that the average worker will have 11 different jobs during their career, so it’s likely that you’ll have a few pension pots with different providers.
“To avoid losing out on your hard-earned savings, it’s a good habit to consolidate old workplace pensions into a personal pension each time you change jobs.
“This way your personal pension becomes your ‘home’ pot, that you’ll keep until retirement, and you’ll only ever have to manage this and a current workplace pension.”
By doing this each person will only pay fees on one larger pension pot, rather than paying multiple fees on a range of smaller pots.
The second tip Ms Savova gave was increasing contribution payments.
She said: “A little can go a long way in terms of pension savings so, if you can, try increasing your current level of contributions by an additional one or two percent of your salary.
“Over time, the compound interest you can earn on your savings could have a significant impact on your pension pot by the time you decide to retire.”
Additionally, she urged the importance of calculating any future salary.
“The exact amount you’ll need depends on several factors including how old you are today, what kind of pension you have, what age you hope to retire, and how much you’d like to receive as an income during retirement,” she said.
Ms Savova continued: “A useful rule of thumb is to aim for a retirement income that’s roughly two thirds of your current salary.
“For example, if you earn £30,000 a year, you should aim for a retirement income of £20,000 a year, saving more each time you get a pay rise.
“If you have or expect to have a full 35 year history of National Insurance Contributions you can include the full State Pension of £9,339.20 per year in your calculations.”
Furthermore, another important tip was setting a short-term saving goal.
She said: “Saving for your retirement is a marathon, not a sprint.
“It can be overwhelming to think about how much you’ll need to put aside to be able to afford the lifestyle you’d like in retirement.
“So, for now, think short-term and put a savings plan in place that you can comfortably stick to.”
Lastly, Ms Sovova mentioned the value of letting your pension grow.
She said: “While you can legally access a personal or workplace pension from the age of 55 (57 from 2028), it doesn’t always mean you should.
“ONS data shows life expectancies are at the highest ever observed in the UK – with today’s 65-year-old males expected to live for a further 18 years and females an extra 21 years, on average.
“For this reason, it’s essential to ensure you have saved enough to last well into old age. Leaving your pension untouched, and your savings invested, for just a few years longer could dramatically increase your retirement income in later life. And when you do eventually retire, try to keep withdrawals to a minimum and only take out what you need.”
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