Top Tips for Late Pension Beginners
Posted on July 2, 2011 by admin
If you’re in your 50’s or 60’s and have no retirement savings remember it’s never too late to start saving, but you’ll need to be pretty savvy. While time isn’t on your side, you still have various ways you can boost your retirement income.
Set Your Pension Target Income
Start by knowing just how much money you’ll need coming in to have a happy retirement. Experts advice varies between 25% and 100% of your salary as a suitable figure, but what you’ll actually need will depend on your personal situation.
Check Current Retirement Plans/Savings
If you have existing pensions from current and previous employers, savings accounts, and any other retirement products, look at what they may be worth when you retire. If you think you may have paid into a private pension plan but can’t find the details, or a former employer is no longer contactable about a scheme, you can use the government’s pension tracing service here to track it down free of charge.
State Pension & NI contributions
Don’t overlook your state pension. You’ll need to look at how many years you paid the minimum level of NI contributions and therefore how many qualifying years you have towards your benefit entitlement. You need a total of 30 qualifying years to receive full state pension, and any over that level go to increase your second state pension.
How Much Can You Save Now?
Now you know what you’ll need, look at your current situation and establish how much you can afford to put aside each month now. Draw up a budget of your income and expenditure to help you do this.
Savings Options
Paying into a pension scheme will give you tax relief per year limited to your annual income or £3,600 whichever is greater up to a max of £50,000 that you can pay in each year. ISAs are another option with £10,680 that can be saved each year with £5,340 of that which can be saved in cash. This money can then be used to purchase an annuity to generate an income during your retirement if you wish.
Start Saving Now
Whatever the picture you’ve now got of your finances and pension possibilities, don’t delay any longer but start saving now because every month counts and will boost the compound interest of your ISA or pension fund.
Other Assets
Other assets that you have such as your home can help create a retirement fund for you too. Downsizing your home for example will release cash. Alternatively equity release may be something you can consider as this means you can remain in your home while still releasing some of its value. It will mean you won’t be able to leave it to anyone in your will however.
Postponing Retiring
Not an ideal choice, but delaying your retirement by just 12 months could impact your retirement income significantly as deferring payments gives them a chance to grow more.
Seek Advice
If you’re still uncertain what to do next, seek advice from an independent advisor. Citizens Advice Bureau can advise your for free.
