You’re in your fifties and you still know the tunes from the Seventies! The moves you make now can have a big impact on your retirement, so it’s important to review your plans. And, while starting early is always better, it’s never too late. Here is an easy checklist to get you on the path to the retirement you want:
If you choose to leave work or retire early, it’s important you know how your retirement plans, pensions and benefits can be affected (external website). Staying in work means you keep earning and can keep saving, by continuing to save into your workplace pension, for example.
But if you’re ready for a change of job or pace, or have caring responsibilities, then you have the right to ask your employer about flexible working (external website). Your employer may be happy for you to phase your retirement and change to flexible or part-time hours.
Check your State Pension and see if you can improve it
If you qualify, then you can get a State Pension from the Government once you reach your State Pension age. It’s a good foundation for your income when you retire.
Your State Pension is based on your National Insurance contributions and your own circumstances (external website), so not everyone will get the same amount. The State Pension is currently £179.60 a week, which works out around £9,350 a year, but yours may be more or less than this. It normally gets increased each year.
The new State Pension was introduced in April 2016 to provide a simpler system for everyone, but your National Insurance history before then will also be taken into account. If you were in a ‘contracted out’ work pension in the past – and as a result, you paid less into the National Insurance system – this may be reflected in the amount you get. Find out more about how your State Pension is calculated (external website).
Your State Pension age is the earliest you can get your State Pension. You can quickly check your State Pension age online (external website) at any time. State Pension age is regularly reviewed by the Government and may change in the future, so make sure you regularly check what yours is. Some recent proposals were announced (external website), but these don’t affect people born before 1970.
Your online forecast may also help you spot any gaps in your National Insurance record. You can get National Insurance credits automatically if you’re claiming certain benefits like Jobseeker’s Allowance, Employment and Support Allowance or Carers Allowance.
But some others you may need to apply for. This includes National Insurance credits if you’re caring for a child under 12 years of age. These are called ‘specified adult childcare credits’ but are also known as ‘grandparent credits’.
Find out more about National Insurance credits (external website), including how to claim.
You may be able to pay voluntary contributions to fill gaps in your record. This is usually done through paying Class 3 voluntary National Insurance contributions. Paying voluntary contributions might not be right for everyone – find out more about this option and whether it might be right for you (external website).
Save with a workplace pension
To help boost your pension pot, it is important to explore the other ways in which you can save for retirement. A workplace pension is an easy way to save for later life.
So how does it work? You make contributions directly from your salary each month. When you pay in, in most cases, your boss and the Government will too.
If you don’t save into a workplace pension when you get the chance, or you choose to leave it, then you’re giving up this extra money from your employer and the Government.
Your pension scheme provider will usually send you an annual statement so you can see how much is in your pension pot and when you can access it.
Some pensions let you contribute more, and some employers will match any extra you pay in, so your pension pot might grow even faster.
It’s also important to plan for retirement if you are self-employed.
Get saving and save some more
Whatever your situation, it’s not too late to put some money away for your retirement. Most people can expect to get back more in retirement than they put in their pension.
Your pension scheme provider will usually send you an annual statement so you can see how much is in your pension pot and when you can access it. Some pensions let you contribute more, and some employers will match any extra you pay in, so your pension pot might grow even faster.
If you’ve had a number of jobs through your career, then you may have different amounts saved in different pension schemes. The free Pensions Tracing Service can help you find contact details from pension schemes (external website) you might have lost track of.
There are other ways to save too, including a personal or stakeholder pension (external website). These are private pensions that you arrange yourself. Whichever route you decide is best for you, keep your money safe by checking that the scheme you’re looking into is FCA regulated (external website). This can help to protect you from scams (external website).
If you are self-employed or don’t have the option of a workplace pension, then it’s important to think about saving for later life. There are still pension products out there for you, and you might still get tax relief from the Government.
Many workplace pensions, personal pensions and stakeholder pensions are held under ‘defined contribution’ schemes. This means they’ll provide you with a pension pot based on how much is paid in, and how the contributions are invested. Find out about the different types of pension (external website), or find out what kind of pension you have by using this free tool (external website).
Help and advice
Pension freedoms mean that you can now decide what you want to do with your defined contribution private pension(s) once you reach normal minimum pension age (external website) (usually 55). If you have a defined contribution pension, Pension Wise (external website) can help you make sense of your options before making any decisions.
It won’t recommend any products or tell you what to do with your money. Instead, it offers free impartial guidance, including information about tax, comparing products, getting financial advice and avoiding scams.
You can access Pension Wise (external website) online, or book a free telephone appointment anywhere in the UK. A free telephone appointment is also available for those living abroad.
While Pension Wise is for people approaching retirement, you can get free impartial guidance about workplace and private pensions at any age from The Pensions Advisory Service (external website). The Money Advice Service (external website) can help with advice about retirement planning, savings and managing your money. If you would like a personalised recommendation, you can also talk to an independent financial adviser, but you’ll usually have to pay for the advice.
Working differently in the future
There are many ways to work up to, and beyond, your retirement age. Staying in work means you keep earning and you can keep saving too.
You might want to slow down or use your skills and experience in a different role. You might have new caring responsibilities to manage and need a balance between work and home.
If you’re ready for a change of job or pace, then you have the right to ask your employer about flexible working (external website). Your employer may be happy for you to change to flexible or part-time hours.
There are lots of options to work differently and manage your retirement saving in the best way for you.
Try out a mid-life MOT
We all need to take stock from time to time. It can be really helpful to ask ourselves: What do I want from life as I get older? How can I plan for what I want?
Looking at your money, job and health together can mean you stay healthy, get the most from work and save to get the retirement you want.
It makes sense to take control of your future and having a mid-life MOT is a good place to start.