Planning for your retirement is a big financial and emotional step. So, it’s helpful to consider your retirement goals, how much time you have to save and plan, as well as how much money you’ll need to fund your future lifestyle.
While Standard Life report that, on average, people begin to plan their retirement at the age of 36, if you’re yet to start planning how you’ll fund your post-work income, you’re not alone.
In fact, data from Phoenix Life suggests that 37% of over-50s leave their retirement planning pretty late, or choose not to plan at all.
It’s never too late to start planning for your retirement
If you’re over 36 and only just starting to think about your retirement – don’t panic. Whether you’re in your 40s, 50s, or edging towards 60, there’s still time to take some positive steps towards a more comfortable retirement.
So, read on for four excellent reasons it’s never too late to save for retirement and how a financial planner could offer useful advice and support.
1. Your pension money is invested
Your pension wealth is invested. The powerful effects of compounding mean you could benefit from returns on both the money you pay into your pension pot and on any investment growth you achieve.
When it comes to compounding, the longer your wealth is invested, the greater the potential for growth. Since pension savings are typically invested over a number of decades, the potential long-term gains could make a substantial difference.
Even if you’re a little late to focus on your savings, there could still be potential for growth.
For example, if you start saving at age 50 with plans to retire and take your money at 66, your money would be invested for at least 16 years. You may decide to leave some of your pension savings invested when you’re ready to start drawing an income from your plan, meaning you could benefit from continued returns on your retirement savings.
Remember, the value of investments can go down as well as up and could be worth less than was paid in. This could mean there’s less time for your savings to recover from any market fluctuations. As such, you may wish to take less risk with your investments as your retirement draws closer.
Speaking with a financial planner could help ensure that your pension investments are well balanced and appropriate for both your time horizon and appropriate for your risk profile.
2. Your State Pension could form a helpful foundation to your retirement income
As well as any pension savings you’ve accrued during your career, you may also benefit from the State Pension.
The full new State Pension amount for 2024/25 is around £11,500 annually. The amount you receive will depend on your National Insurance contributions (NICs). You need at least 10 qualifying years to receive any State Pension at all, and 35 years for the full amount.
If you have gaps in your National Insurance record, you could purchase additional credits. Another potential option is to defer your claim. This could increase the amount the State Pension pays out once you start claiming payments.
Read more: Did you know you could defer receiving your UK State Pension?
Whether deferring your State Pension or purchasing additional National Insurance credits is right for you will depend on your circumstances. A financial planner will look at your situation and discuss the pros and cons of whether it might be appropriate for you.
3. Tracking down lost pensions could pay dividends
No matter your age, when you start planning for your retirement, one useful area to consider is whether you have any old pension pots that you may have forgotten about.
This can happen for a variety of reasons. Though, it’s more likely to have happened if you’ve moved jobs throughout your career, or if you’ve moved house and failed to update your details with your pension provider.
If you’re an expat and have worked abroad for a number of years, you may have pension pots in more than one country.
In the UK, PensionBee report that there could be as many as 4.8 million lost pension pots. And data suggests that up to £50 billion is at risk of being misplaced. Indeed, 1 in 10 workers are believed to have lost pensions worth more than £10,000.
With this in mind, there’s a strong chance you may have pension savings that you’ve lost track of.
To locate your forgotten pension pots, get in touch with your old providers. If you’re not sure who to contact, your former employers may be able to help.
Providers will usually send an annual statement, so look through your files and gather any documents or emails relating to your old pensions.
Read more: How to find lost pensions, savings, and other forgotten money
If you’d like to take the hassle out of tracking down your forgotten pension pots, get in touch. One of our financial planners will help you to locate your missing wealth and provide advice on how best to use these savings towards your retirement goals.
4. Tap into property wealth
If you’re concerned you won’t have enough time to accrue the savings you need for a comfortable retirement, there may be alternative ways to bolster your post-work income.
For example, moving to a smaller or cheaper property to release equity from your current home may generate a significant sum to boost your income.
If you don’t want to move house, you could consider equity release, enabling you to withdraw tax-free cash from the value of your home as a lump sum or a series of smaller payments.
Read more: The guide to using equity release to unlock property wealth later in life
Depending on your circumstances, property could present a variety of opportunities to enhance your retirement income. A financial planner can evaluate your situation and offer bespoke advice that aligns with your specific needs and aspirations.
Get in touch
If you’re concerned that you’ve left retirement saving too late, we can help you create a plan to save towards your ideal lifestyle in the next phase of your life.
Email enquiries@alexanderpeter.com or give us a call on +44 1689 493455.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.
The tax implications of pension withdrawals will be based on your individual circumstances. Thresholds, percentage rates, and tax legislation may change in subsequent Finance Acts.
Workplace pensions are regulated by The Pension Regulator.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.
Equity release will reduce the value of your estate and can affect your eligibility for means-tested benefits.
