Western Daily Press (Saturday)
Plan the future you want
SOME EXPERT ADVICE TO HELP GIVE YOU AN IDEA
WOULD you shrug your shoulders if you were asked if you’re on track for a financially comfortable retirement – or would you be confident that you know the answer?
According to Which?, couples typically need an income of around £26,000 per year in retirement to live comfortably, while those who are single need around £19,000, including state and private pensions.
And many people are some way off their retirement targets, as separate research from Fidelity International found that while women expect to retire with an annual income of £33,980, this is significantly higher than the £70,052 the average women over 55 has saved into her pension pot.
Those who are unsure about their retirement options may want to speak to the free, Governmentbacked Pension Wise guidance service or get independent financial advice.
In the meantime, to help give people an idea of whether or not their plans are on track for the retirement they want, here are some tips from Maike Currie, investment director at Fidelity International.
Establish what you already have
If you’re not sure whether you are in your workplace pension scheme, ask your employer. They will be able to provide the details of the pension provider and help you view your savings.
From there, you’ll be able to track how much you and your employer are contributing each month.
If you’ve worked at multiple companies, you’ll probably have multiple pensions. These can sometimes be difficult to track down on your but the Pension Tracing Service can help you and it’s free of charge.
Self-employed? Start early
Try to think about your pension as soon as you start earning money, particularly if you’re self-employed. According to Office for National Statistics (ONS) figures, selfemployed workers aged 35 to 54 are more than twice as likely to have no pension wealth than those who have an employer.
You could consider self-invested personal pensions or Sipps. Like an employee with a workplace pension, you can still benefit from tax relief on pension contributions.
You don’t need to have a significant amount in order to open a Sipp, in fact you can put in as little as £25 a month into your Sipp with Fidelity.
By contributing to your pension early in your career – no matter how much or little you are putting in – you will benefit over time. This means the money you contribute in your 20s and 30s could be worth significantly more by the time you hit retirement (bear in mind the value of investments can go down as well as up).
Take ownership
It’s your pension. Make sure you understand where your contributions are going and think carefully about how to maximise them. If you are an employee in your company’s pension plan, your contributions were most likely invested into a “default investment”.
These tend to be broadly suitable for most people, but some want to explore alternative approaches and funds that are better suited to their goals. A financial adviser could help if you are unsure about this.
It is also worth finding out whether your employer is willing to make contributions above the statown, utory minimum levels. Some will offer to match further contributions you make.
Aim for a ‘worry-free’ retirement
Everyone’s dream retirement will look different. The amount you need to save for your retirement will largely depend on what you want to use it for.
Start by working out your current day-to-day outgoings, then consider how often you’ll want to go on holiday and afford other luxuries. Make sure to also consider the cost of care, whether you plan to leave money to loved ones, and life expectancy to ensure your pension will last.
Once you understand what you’ll need for your retirement then you’ll have a goal to aim for. Again, if making those calculations seems daunting, a financial adviser can help.
UNSURE WHETHER YOUR SAVINGS
WILL BE ENOUGH TO BE COMFORTABLY OFF IN RETIREMENT? VICKY SHAW GETS
If women contributed 1% more of their salary each month, they could close the gender pension gap by retirement.
Fidelity International
The pensions gender gap
Women often face a significant gender pensions gap. The gender pay gap, being more likely to take time away from work to look after family, and a propensity to invest less all contribute to the gap but there are steps women can take to close it.
For example, if you’re taking time off work to have children you could increase your contributions when you return, or even get your partner to contribute on your behalf.
Fidelity’s research found that if women contributed 1% more of their salary each month, they could close the gender pension gap by retirement.