Top tips to help your pension

Pensions are often the last thing people think about when reviewing their finances, but our six tips can help you take control of your retirement planning.

Step one: Look ahead

The most effective way to plan for your retirement is to think about the lifestyle you want and the income you may need to achieve that goal. While this may not be as simple as it sounds, the most important step is the first one. Don’t keep putting it off. Grab a coffee or a glass of wine, sit down and tot up your monthly expenses now and make an estimate of what they will be at the time you retire. Ask yourself: Will you have paid off your mortgage before retirement? Do you think you want to downsize? Will you want a little tax-free bonus before you retire?

Step two: Find out how much your pension is worth

People may find this a little scary, but there are several pension calculators online. If you have a private pension, your pension provider should be sending you an annual statement that shows how much your pension is worth. Don’t forget to include your state pension in your forecast. If you’re not sure what your state pension age is and how much you expect to get from the state, you can find out more here.

Step three: Be pension smart

You don’t need to re-train as a financial adviser to plan your , but you do need to keep track of the pensions you have. It’s estimated that people have on average 11 jobs throughout their careers, which may have included a workplace pension as part of the salary package. Even though the value of these funds may be low, they all add up when you come to retire.

Step four: Small steps – Big benefit

It may be a stretch to increase your contributions now, but it is worth making it a priority. Small, regular increases can go a long way, and because pensions benefit from compound interest, the sooner you get money into a pension pot the more value it will have at the time you retire. Even a small tweak such as an additional contribution of 2% of your annual salary can add up to thousands over 10 or 15 years.

Step five: Maybe a little pay rise

Don’t let concerns that you can’t save as much as you need stop you from saving anything. It’s much better to save what you can and look to build on this as you can afford more, rather than doing nothing. If you can pay a little more into your workplace pension, your employer may match this contribution so, in essence, you could be getting a small pay rise that will help fund your future.

Step six: repeat

This should not be a one-off exercise. While it is better to have done it once than not at all, it is even better to always keep an eye on your pension fund – and that means repeating the five steps above. At the very least it is worth reviewing what your pension is delivering once a year. As with all investments, your capital is at risk, and the value of your pension can go down as well as up. This is article is for information purposes only and should not be regarded as direct or indirect financial advice.