Worried about retirement? Follow these 4 tips to boost your pension pot
A new survey suggests pension worries are a common theme among working Brits. So are you part of the 11% that expects to worry about money in retirement? If so, here are some nifty tips that can help ensure your later years are spent in comfort.
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Pension worries: how many people are worried about their retirement income?
Not having to worry about money in retirement is an ‘unrealistic’ prospect. That’s the view taken by 11% of respondents to a new Hargreaves Lansdown survey. Of even greater concern is the fact that 8% of respondents don’t expect to be able to pay their bills once they give up work.
Perhaps the most striking revelation is the fact that older age groups are the most gloomy about retirement. That’s because those aged 55-64 are officially the most pessimistic. Of this age group, 13% say they doubt their pension income would be enough to cover their bills.
Thankfully, many respondents have a more positive outlook. A healthy 41% say they do expect to be able to pay their bills in retirement. On a similar note, 20% believe not having to worry about money is a ‘realistic’ aim at the very least.
What else do the survey results reveal?
The survey results reveal that the majority of pension savers believe their pension will be enough to cover their basic needs. Despite this, the survey also highlights that a sizeable percentage of the UK population is worried about their retirement income.
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, outlines how a low pension pot can significantly impact post-work living standards.
She explains, “While many people feel they have a decent chance of meeting their basic day-to-day expenses when they get to retirement, there are millions of people who don’t, and this is very worrying.
“Worrying about being able to pay your bills or not having enough to cover an emergency cost can hugely impact your quality of life. While some retirees will be able to continue working to help them make ends meet, not everyone will be in this position, and their options once in retirement can be limited.”
Morrissey adds that while the auto-enrolment pensions scheme – introduced in 2012 – will alleviate some pension fears among younger generations, it won’t help those who are close to retirement age.
She explains, “Auto-enrolment will have a big impact over time as more people are brought into the workplace savings sphere, but this will not help people who are coming up to retirement in the next few years and we do see a larger proportion of older workers saying they don’t see a future where they don’t worry about money.
“The good news is younger age groups do seem to be more optimistic about their ability to cover the basics, but it is important to monitor your pensions throughout your working life to make sure you are on track to meet your retirement goals.”
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How can you boost your pension income?
If you have pension fears, it’s worth knowing that you can take steps to boost your retirement income. Here are four tips that can help boost the value of your pension, or at least make your money go further once you stop working.
1. Understand the State Pension eligibility criteria
It’s worth exploring whether you will qualify for the full State Pension. Currently, it’s paid to those aged 66 and over with 35 years of National Insurance contributions. However, the qualifying age will rise to 68 before 2039.
The benefit is worth £9,339 for the current tax year, which can provide a huge retirement boost if you have a small private pension.
2. Cut your bills
Cutting back on your everyday bills will make it easier in retirement. From ditching expensive television subscriptions and switching broadband providers to shopping around for insurance, there are things you can do to reduce the impact on your finances.
For more on this, see our article that explores easy budgeting tips to help you save quickly and easily.
3. Delay your retirement
Working for longer can reduce the chances of your pension pot running dry during retirement.
If you’d rather not take on a full-time job in your mid-60s, working part-time may offer a suitable middle ground.
4. Increase your pension contributions
If you’re a long way off retirement, upping your regular contributions can significantly boost your future pension.
If you don’t cherish the thought of a lower paycheck, you may wish to increase your contributions after you score a pay rise or move jobs. That’s because you won’t necessarily miss the extra cash that you’ll be redirecting to your pension thanks to your increased contributions.
Are you ‘under-pensioned’? To discover whether your pension pot is adequate, see our article that looks at whether you are saving enough into a pension.
The post Worried about retirement? Follow these 4 tips to boost your pension pot appeared first on The Motley Fool UK.
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