Understanding Pensions and Retirement Goals
December 17, 2024Posted by:
Pensions
Planning your retirement early is a key step to enable you to fully utilise your full state pension, and to create a reliable and maintained source of income once you retire. The current state retirement age is 66 years old for both men and women in the UK.
However, you can access your defined contribution pension from 55 years old, which can also be taken when you are still working. This would allow you to work less hours or retire earlier.
The current full state pension is £203.85 per week and to get this you need 35 qualifying years. To earn more than this you need to have a private pension or defer your pension.
Contributing to your pension pot earlier, means you can make the most of pension tax relief.
Retirement goals
When contributing to both your state and private pension you are shaping your ‘post work’ life.
Knowing what you want to do when you retire can help you to get the most from your retirement. This could include:
- A hobby or activity that you currently do and wish to continue to do once you retire
- Going to watch your favourite sports team
- Going on holiday
- Having a meal at a restaurant
- Something as simple as you like to watch Netflix
These all cost money and the steps you take now directly impact your ability to continue doing the things you love when you retire.
Workplace pensions
Although your state pension will cover your basic needs in retirement, it is a good idea to contribute extra money into a pension fund to ensure you can continue to have a high standard of living.
By law your employer must offer a pension scheme and if you are over the age of 22 and earning over £10,000 a year you will be automatically enrolled. The contributions are directly deducted from your wage, your employer may also contribute additionally to your own contributions.
When you change jobs, you have multiple options of what you can do with your workplace pension. These can include keeping the pension active, transferring the funds to your new employers scheme, or transferring your pension to a personal pension. Making these decisions can be difficult without the right knowledge and guidance, as there are pros and cons of all three options. For example; if you move jobs multiple times and keep your old pensions, you must make the provider aware if you move address.
Review
Regularly reviewing your retirement plan is vital to ensure your retirement goals are achievable, changes in life and finances can mean you are sometimes able to increase your pension contributions or have to decrease them.
In addition to this when government legislation changes around pensions it is important that you know how this may affect your retirement. For example tax relief and the state pension ages can change.
Ultimately, ensuring you review your pension plan regularly, helps you to achieve long term financial security and helps you to be in control of your money.
Summary
The steps we take now are the only steps that can guarantee us to have a well planned and relaxing retirement.
Although the world of pensions is constantly changing, by planning, reviewing, and implementing change we can take hold of our pensions and ultimately our life post work.
Want to know more about planning for your future?
The Midlife MOT is a fully funded programme available to workers aged 45-55 in North East England. It helps employees to take stock of their finances, skills and health, and enables them to better prepare for retirement. As it is fully funded there is no cost to the employer or the employee!
If you would like this to be offered in your workplace ask your employer to get in touch.
Or maybe you’re an employer and would like to know more about how you can access this fully funded programme to support your staff, at no cost to you.
Either way please email us and we’ll be in touch.
Email: [email protected]
December 17, 2024Posted by:
