Saving for retirement is vital, but many people often ask, how do I save comfortably? Here are 6 top tips to think about when saving your pension.
Company pension scheme
Ensure that you are enrolled in your company’s pension scheme as soon as possible. Thanks to auto-enrollment from most employers, this should happen automatically. Employer contributions will play a huge role in helping you build your pension pot, but it is always advised to pay in a little more than the minimum contribution limits.
If you’re self-employed, it is best advised to set up your own personal pension. As you won’t have the advantage of employer contributions, it’s even more important to start retirement planning as soon as possible.
Don’t rely on State Pension
The age at which you can claim your state pension is continuously being pushed further and further back. The state pension age will increase from 67 to 68 in 2037-39, seven years earlier than previously planned. The change will have most impact on those in their late 30s and early 40s.
Plan retirement goals
What do you want to do when you retire? Make sure you think carefully about exactly how much you’ll need in retirement. Consider all your outgoings, from living costs to travelling. Statistics say that those currently living in retirement say their living costs account for 58% of their outgoings.
Pension contribution limits
Stay within the pension contribution limits. This tax year (2019-20) you can contribute a maximum of £40,000 or 100% of your salary, whichever is lower, into pensions and still benefit from tax relief. There is also a Lifetime Allowance of £1,055m in the 2019-20 tax year. This is the maximum amount you can save into your pension funds without being subject to additional tax charges when you withdraw money.
Get professional advice
We can help! If you’re unsure as to how much you should be saving, where your pension pot should be invested, or have any other questions seek professional advice as this could have a significant impact on your retirement income later on.
You will want peace of mind that your pension won’t be holding you back or leaving you with financial difficulties. Speak to us at the earliest opportunity so you can take steps now to benefit from your full retirement options.