Boost Your Retirement Funds With These 5 Pension Tips

Size can often matter, and that is certainly the case when it comes to your retirement funds. The more money you have in your pot when you stop working, the more comfortable lifestyle you can have. Therefore, it is crucial to maximising your pension.

This short article aims to provide you with five tips on increasing your pension size. It also looks at a few factors that influence when you can retire. Planning for your long term future is crucial; when considering your pension, take on expert advice from a specialist such as Portafina.

Five pension-boosting tips.

  1. Start immediately.

You have a finite amount of time between now and your retirement date. Therefore, you should start saving into your pension as soon as possible. Doing so will maximise the time you have to grow your funds.

  1. Make top-up payments.

Making regular top-up payments to your pension can significantly affect the size of your pot. Remember, your pension contributions receive tax relief and compound interest growth. Any top-up payments will also benefit from these boosts.

  1. Stay in your workplace pension scheme.

With a workplace pension, you receive contributions from your employer amounting to around 3% of your gross annual salary. If you opt out of this scheme, you will miss out on thousands of pounds each year. Therefore ensure you stay within your workplace pension scheme.

  1. Ensure your pension remains relevant.

As you go through life, your priorities will change. A pension taken out at the start of your career may not remain relevant to your circumstances later. Therefore, review your pension regularly. Doing so will also enable you to check that management charges or underperformance are not eroding your pension funds.

  1. Extend your pension contributions.

Working for a few years beyond your anticipated retirement can make a massive difference to your pension pot. Those additional years will include compound interest on your whole pension fund, and you will also continue to receive tax relief on your contributions.

Factors affecting when you can retire.

You may have an idea of when you want to retire. However, there are a few factors you should consider that will affect this:

  • Longer working lives. Today, many more 60 to 64-year-olds are working than there were two decades ago. Indeed, the number of working women in this group has risen by 14.3%.
  • Rising State Pension qualifying age. The qualifying age for women to receive the State Pension has risen in recent years and is now the same as for men for the first time. For both, the State Pension age will rise over the next few decades, which could affect when you decide to retire. Although the full state pension, at £179.60 per week, is unlikely to support your retirement fully, it is an excellent supplement. Therefore, you may need to have an alternate source of income to bridge the gap between your retirement and when your State Pension kicks in.
  • Greater pension flexibility. Following pension freedoms introduced in 2015, many people can now access their pension funds from age 55. This greater flexibility gives people more options for when they can retire. Although it may seem appealing to take your money early, doing so could leave you short of income later in your retirement. Therefore, you should ensure you are making the right long-term decision. A financial advisor can help you with this aspect of your finances.