Tips For Making The Most Of Your Pension

It has recently been announced that the UK government is planning a future pension review for every five years, with the intention of raising the pension age over time in order to match an increase in human life expectancy. If these increases continue in the way that they have been, it is anticipated that today’s teenagers will not be able to retire until they are 77.

As life expectancy rises, we can expect to spend more years working as well as more years in retirement. However, without planning well for the future you could end up struggling to make ends meet in your golden years. Putting something aside for old age is important and ensures that you will be able to maintain your standard of living when you retire. Also, it is important to know how to make the most out of the pension that you have.

Here are some tips that will help you make your pension deliver more so that you can ensure a rich and fulfilling retirement:

Review Your Pension Regularly

When is the last time you gave your pension a review? A recent survey by Barrett Asset Management revealed that 45% of non-retired adults in the UK had never looked into their pension. Your retirement income will depend on the performance of your investments, which is why you want to know how they are doing and the results that you can expect from them.

One of the most important things to know is to understand your level of risk. Are you comfortable with the level of risk on your investments? Remember that you can switch funds at any point so you might want to invest in high risk options earlier in life and then switch to low risk as you get older.

Boosting Your Pension

Another way to make your pension work harder for you and to get more out of it is to give it a little boost. Choose a pension contract which will allow you flexible payments, so that you can change the amount that you pay in. When you are making lots of money and you can afford to pay more, you can build up your pension fund. When you can’t afford to pay as much, you can drop your payments back down to a normal level.

Also, if you receive a windfall of unexpected cash such as an inheritance or a work bonus, you could consider saving it in your pension. If you have recently paid off a loan or cleared your credit card debt, you can put the extra money into your pension before you have gotten used to spending it.

Merge Multiple Pensions (Maybe)

In some situations, you will make the most of your pension if you merge together multiple pensions into one. This can help you to manage the pension more easily and will save you money if you are transferring between a high cost scheme and a low cost scheme. If you are consolidating your pensions in a flexible scheme, it might open up more choices for you when it comes to investments.

However, sometimes this doesn’t work as well. If your existing pension scheme has guaranteed annuity rates it might not be worth it to switch out and lose them. You also might be charged by some of your pension providers for transferring money out of their scheme, which could leave you worse off in the end.

These are just a few ways that you can make your pension work for you so that you can enjoy the best quality of life during your golden years of retirement.

Kay Brown is a blogger who specializes in answering financial questions such as why should you have a pension review and how important is money management when considering your future. 

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