5 tips to get the most out of your pension
With people living longer, planning for retirement has never been more important.
Life expectancy in the UK has risen significantly in the last couple of decades. Men can now be expected to live another 14 years when they reach 65, while women can look forward to another 16. Planning early is vital to ensuring you are suitably prepared for retirement, but what else can you do to ensure you are putting enough away? Robert Forbes gives his five top tips to make sure your retirement is as comfortable as possible.
- Maximise contributions. The biggest factor to your pension pot size is contributions. Contribute as much as you can for as long as you can to see the greatest benefit when you eventually stop working.
- Active management. Have a financial planner make changes to your investments within a set portfolio at least every three months. Once a year is, frankly, not good enough. Your pension is like a garden; leave it untended for too long and it will become a mess.
- Understand your scheme. Take a detailed look at your pension scheme. If you’re concerned you might be missing something, approach a financial adviser. Be aware that some older pension schemes can be expensive and may contain hidden charges.
- Carefully consider pension freedoms. Think about how you want to use your pension savings. Anyone aged 55 or over can take the whole amount as a lump sum, paying no tax on the first 25%. Another option is income drawdown, which is a way of using your pension pot to provide you with a regular retirement income by reinvesting it in funds.
- Know all of your retirement options. ISAs, properties, savings, the Enterprise Investment Scheme (EIS), and Venture Capital Trusts (VCTs) are all avenues that you should explore when planning for retirement. They are all potential retirement solutions; pensions are but one tool in the toolbox.