You know that life starts in your forties, but have you started to think about how you plan to financially cover your retirement in later life? People are living longer than they used to. On average, 65-year-old men can expect to live for another 20 years, and women another 22. Planning for your retirement is key.
It may seem a while off, but it’s important to consider the kind of lifestyle you’d like to enjoy, even when it’s time to slow things down. Here is an easy check list to get you on the path to the retirement you want:
Your State Pension – get your online forecast
The State Pension is designed to provide you with the financial foundation for your retirement income. You can get an online forecast of the amount of State Pension you could get, and the earliest date you could get it.
Your State Pension amount is based on your National Insurance contributions and your own circumstances, so not everyone will get the same amount.
The new State Pension was introduced in April 2016 to provide a simpler system for everyone, but your National Insurance record before then will also be taken into account. Find out more about how your State Pension is calculated. The State Pension is currently £164.35 a week, which works out around £8,500 a year, but yours may be more or less than this. It normally gets increased each year.
Your State Pension age is the earliest you can get your State Pension. State Pension age is regularly reviewed by the Government, and may change in the future, so make sure you regularly check what yours is. You may be affected by recent proposals to increase the State Pension age which affect people born between 1970 and 1978. People born before 1970 or after 1978 aren’t affected by these latest proposals – but everyone should continue to check their State Pension age as there may be changes in the future.
Your online forecast should also help you spot any gaps in your National Insurance record. You can get National Insurance credits automatically if you’re claiming certain benefits or applied for child benefit for children under 12, (it is important that you apply for Child Benefit even if you will not get a payment to ensure you are rewarded the National Insurance credit). Other credits may be awarded if you apply for them, such as if you’re caring for a child under 12 who is related to you. These are called ‘specified adult childcare credits’ but are often known as ‘grandparent credits’. Find out more about National Insurance credits, including how to claim.
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.
Make sure you understand how your pension scheme works, and keep up to date with how much your pension pot is. Your pension provider may send you an annual statement to show how much you have saved.
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.
When you are thinking about a new job or changing jobs, find out about the pension scheme too and how much your employer contributes to it. It’s an important part of your total package. Some employers even match your contributions, so if you pay more in, so will they – meaning your pension pot will grow even faster.
By law, your employer will have to enrol you into a workplace pension if you earn £10,000 a year or more, if you usually work in the UK and you’re not already enrolled in one.
Find out more about Workplace Pensions
Get saving and saving more
There are other ways to save too, including a personal or stakeholder pension. These are private pensions that you arrange yourself. Be sure to keep your money safe by checking that the scheme you’re looking into is FCA regulated. This can help to protect you from scams.
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.
You can get impartial advice about pensions from The Pensions Advisory Service. The Money Advice Service can help with advice about retirement planning, savings and managing your money. 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. 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.