It is nice to have a bit more of some things, especially fun, time with family, and the occasional luxury here and there. Of course, these things come at a cost, so it’s even nicer to have the money to afford them.
Some of us may have thought about this at an early age and are now reaping the benefits of long term investments. One of our advisors here at This Is Brighton has studied numismatics which is the study of rare coins and has used that knowledge to expand her wealth but for the majority of us we are reliant on our pensions.
Indeed, when it comes to your retirement fund, having some more could be the difference between comfort and struggling to get by. The good news is you can increase your retirement funds by making a few adjustments here and there. Read on to discover them today.
8 Great Tips to Boost Your Retirement Savings
Contribute to a workplace pension scheme
If you earn over £10,000 annually and are at least 22, you will be enrolled in a workplace pension scheme. This means that at least 8% of your salary’s value goes towards your retirement funds. This amount comprises the money you pay, your employer’s contribution, and government tax relief.
If you were to opt-out of your workplace pension, you would not receive any employer contributions or benefit from tax relief. Over the years, these can add up to a significant amount of money. Therefore, you should remain within the scheme and continue contributing to your retirement fund.
Regularly review your pensions
As well as contributing to your workplace pension, you may also be paying into a private pension plan. If so, that is excellent preparation for your retirement.
However, merely making contributions is not enough. You should regularly review your pensions’ performance to ensure it remains on target.
If it is not performing as expected, it could leave you short of money when you retire. Also, high charges may be eating into your pension profits. Failing to review your pension means you’ll be unaware of these and won’t be able to rectify the situation.
Incredibly, over 70% of defined contribution pension holders are unaware of the level of charges they are paying. This situation is even more staggering when you consider that reducing your charges by only one percent could reap you an additional £27,000 into your pension pot. Similarly, switching to a pension that performs just 2% better could see £54,000 more in your fund.
To get help in this area, you can consult with a regulated financial advisor. They will assess your pension scheme and advise you whether it’s worthwhile sticking with it or transferring to another plan. Check out Portafina.
Check Your State Pension Entitlement
You will likely understand the state pension is probably not enough to sustain your retirement on its own. However, it does provide a good foundation. Therefore, you should know how much you are likely to receive when you reach the qualifying age.
To receive the full State Pension, you must have made national insurance contributions for 35 years. Although these years do not need to be consecutive, any gaps will reduce the State Pension you are entitled to.
Track down any misplaced pensions
If you have changed employers throughout your working life, you could have several workplace pensions. Even though you no longer contribute to the schemes, the money within them is rightfully yours. Therefore, you should track them down as soon as possible. If you don’t, they could be underperforming and be subject to high charges. Both these could be eroding your money within these pensions.
Claim your full tax relief
A significant benefit of saving into a pension scheme is that your contributions qualify for tax relief. If you are a basic rate taxpayer, your tax is reclaimed by your pension provider or your employer. If you pay tax at a higher rate, you must reclaim it yourself through the HMRC self-assessment process. Either way, you should ensure you claim the total amount of tax relief you are entitled to.
Make top-up payments whenever possible
Making regular top-up payments in addition to your regular pension contributions can boost your retirement fund considerably. You can make these top-up payments as a one-off lump sum or smaller amounts more regularly. Topping up your pension by an additional £100 a month could put £46,000 more in your retirement coffers.
Carry forward any unused allowance
Your annual allowance is the maximum amount you can pay into your pension fund without incurring a tax bill. That limit is currently £40,000 or the value of your salary, whichever is the least and includes your employer’s contributions as well as yours.
To avoid any tax, you have the option of carrying forward any unused portion of your annual allowance. However, you must have first used up your annual allowance for the current year.
Consult a regulated financial advisor
Pensions can appear complex, and dealing with them may not be your idea of fun. Therefore, you may choose to consult with a regulated financial advisor for help in this area. If you do, it could be a financially prudent decision. Research has shown that people who receive financial advice end up with an average of £27,000 more in the pension pots. For that amount of money, it is certainly worthwhile having a chat.