Life is full of the unexpected, and that is why you should always be prepared for every eventuality, especially when it comes to your pension. Many individuals make mistakes when it comes to their pension, whether they do not save in time or rely solely on a state pension. However, most of these problems are available if the right precautions are taken. This will ensure that your retirement can be supported with a suitable pension to cover your costs for the rest of your life.
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Equity
Many homeowners decide that releasing the equity on their houses is an important step to securing the best retirement fund possible for themselves and their family. However, whether a lifetime mortgage or a home reversion, releasing the equity on your house can lead to both positive and negative consequences such as extensive interest rates and having to sell your home for a decrease in market value in the future. Then, you should consider carefully before making an irreversible decision about the equity on your home.
Saving
Saving is the most important way to support yourself after you retire from full-time work. By saving enough throughout your lifetime to rely on in your golden years can ensure that you both have enough money to survive, and do not have to rely on other income schemes such as a state pension. Additionally, saving early can ensure that you get the most from your money due to compound interest rates, which increase according to the amount of time that you save.
For instance, saving the same amount will give you thousands of pounds more over 20 years than it would over 10, due to the increasing interest rates available to you the longer you save. If you want to find more tips on saving well, head over to Portafina’s Facebook page, or their Twitter, YouTube or LinkedIn, which has all you need to make the right financial decisions for retirement.
State Pensions
State pensions are currently fixed at £115 a week, no matter the specifics of your working life. However, £6,025 a year is not an extortionate amount when compared with rent and bill costs, and so you should consider the best ways to increase this amount before you retire.
Another important factor to consider about state pensions is that the year that you will receive this money directly corresponds with life expectancy. This means that you could find yourself working long into your alleged retirement due to a lack of pension. Therefore, you should take steps such as creating an independent pension, which you can pay into to ensure that you can retire at will.
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Annuities
Many people thinking of retirement rush to buy annuities from their pension company without considering beforehand the implications and the best deals available to them from other options. However, once you have taken out an annuity, this is usually an irreversible contract, and so it is important to seek the full range of deals before you buy. The best deals can normally be found on the open market, where you can view the full range of positive and sometimes negative deals available to you, of which there can be a 60% difference in income.
Pension Performance
Not only this, but you should always be sure to check your pension’s performance as often as possible. Often, pension companies can change their policies according to your circumstances and regulations. However, this is not always to your benefit, and you may find that you are not collecting as much revenue as you may have hoped.
Additionally, if your pension is not increasing as it should be, it may be a case of having to change the management of your investments and other outgoings. Therefore, by tracking your pension, you can ensure that the amount you need is ready by when you retire and that you have the expected pension available to take with you into retirement. If you need to speak to an advisor about your needs, Portafina has a host of professional advisors who can recommend your next course of action.
Work Pension Schemes
Most people gain the majority of their pension through workplace schemes. Now, due to the integration of workplace auto-enrolment, it has become even easier to save. However, many people are still opting out of the schemes due to a decrease in wages. In the long term, however, opting out will mean that your pension could be drastically reduced. This is because employers must contribute 0.8% of their revenue into pension schemes, ensuring that both you and your employer adds to your retirement fund. Not only this, but the tax relief is 0.2% of your contribution and 1% for your employers, allowing you to gain more money than you put in.
Disclaimer: The information above is not financial advice. For any financial decisions you need to make, please talk to a qualified financial advisor beforehand.