With the General Election now behind us and the Conservatives retaining power, it’s likely that the State pension age increases will stay in line with reaching 67 for both men and women by the year 2028 – a mere 8 years in the future.
If you’re relying on your State Pension to fund your retirement you may be in for a rude awakening as even with the triple lock (meaning annual State Pension increases are determined by the highest value out of either price inflation, average earnings growth or 2.5%) it’s currently £8,778 per year, below the £10,200 minimum that the Pensions and Lifetime Savings Association (PLSA) say a single person needs to live on frugally.*
The majority of us know we should be saving for our retirement; indeed auto-enrolment is helping increase pension wealth to be on average 42% of people’s total wealth – an increase from 34% 10 years previously. It has also boosted the number of people with private pensions from 43% to 53% since July 2010.** However, if you move companies (2017 research by insurance firm LV shows UK workers on average change their employer every 5 years), you could end up with several pension pots lying around that not only do you forget about, but are unlikely to be maximising the potential return for you in retirement.
Although there are calls for auto-enrolment to pay into a private pension (after all you wouldn’t change your bank account each time you change jobs), it’s important to regularly evaluate your pensions savings and consolidate if this is the right thing for you – a professional financial adviser will be able to advise accordingly.
On average we plan to retire at the age of 64 years, which immediately poses a shortfall before state pension age is reached. If you’re the wrong side of 40 and realisation is dawning that your savings are simply not going to be enough, it’s time to step up your financial planning. Consider your attitude to risk and get advice on effective investing. If you turbo charge your pension savings in the right places and portfolios for the last 10 years of your career, you could be heading for increased wealth and a more relaxed retirement.