How to Get the Most Out of Your Pension
Everyone wants to get the most out of their pension, but how should you go about doing it? There are lots of pension planning tactics you can employ, and here we outline just a few of them.
Plan How Much You Will Need for Retirement
The first step to take when it comes to getting the most out of your pension is to work out how much you will need for your retirement. This means sitting down and creating a spreadsheet of your expenses, including the things you will want to do such as holidays and hobbies.
If you will have a state pension, work out how much of your expenses will be covered by this. You should be able to come up with a figure for what you need to live on and how much you will need to save into your pension, and this will be a good starting point.
Start Saving as Soon as Possible
One of the simplest retirement planning tips is to start saving as soon as possible. You can start saving at any time, even in your 50s, but the earlier you start, the larger your pension will be.
Consider a SIPP for More Control
A self-invested personal pension (SIPP) could be a good option when it comes to pension planning. This is a type of DIY pension where you can choose your own investments. You can invest almost anywhere, but you need to understand investing and know what you are doing.
Combine Pension Pots
You may have worked for multiple employers by the time you retire. If you have more than one pension pot, you could consolidate them so they are all in one place, and this makes it easier to manage your savings.
Before you do this, however, always check the details of your pension, because there may be charges for moving a pension pot too early.
Take Advantage of Tax Relief
Tax relief is a large and complex area. You should automatically get basic-rate tax relief, so for anything you contribute, more will be added by the taxman. If you are a higher-rate taxpayer, you can claim even more in tax relief.
Pass On Your Pension to Your Children
You may be able to pass on your pension to your children as a legacy. If you die before 75, they will not pay any tax on it.
Don't Get Hit By Unexpected Charges
Keep an eye on all the costs involved with your pension, especially with SIPPs. They have different charging structures, so you need to get a good understanding of all the costs to avoid being hit by unexpected charges.
Consider Saving More
One of the simplest retirement planning tips is to save more money. If you are in an auto-enrolment pension scheme at work, you might want to start saving more so you can increase your retirement income. If you get a bonus at work, consider adding it to your pension.
Plan Carefully If You're Self-Employed
If you are self-employed or run your own business, you need to start thinking about retirement as soon as possible. Many self-employed people do not save for retirement, but this is risking your future financial security.
There are numerous pension schemes that can help, such as the National Employment Savings Trust (Nest). We also offer specialist retirement planning services to help businesses. This involves careful planning early on to work out an exit strategy and consider tax-efficient disposals, if you would like to know more about how we can help you or your business then get in touch with a member of our dedicated team today.