It’s easy to think that if you have a pension, you can forget all about it until it’s time to retire. However, regular reviews with your adviser aim to help you enjoy a more financially comfortable lifestyle in retirement. Don’t make these costly pension planning mistakes…
1. BEING OVER-OPTIMISTIC ABOUT YOUR STATE PENSION
Although the basic state pension has risen to £155.65, not everyone will receive the full amount as it depends on your contribution record. In reality, it will never represent more than a safety net. Getting a pension forecast from www.directgov.co.uk will show you what you’re likely to receive.
2. NOT JOINING AN EMPLOYER SCHEME
If you can join a workplace pension scheme, you should jump at the chance. By 2018, all UK companies will have to offer one and will contribute to it on your behalf provided that you don’t opt out of making your own contributions. As with your state pension, you need to keep an eye on the amount of benefits you’ll receive.
3. NOT REVIEWING YOUR PLANS REGULARLY
The longer you delay, the more expensive it becomes to build up a reasonable pension. It really pays to review your contributions regularly to help ensure you’re saving as much as you can comfortably afford and that your pension pot is invested in a diversified spread of funds.
The earlier you save, the more opportunity there is for your pension to grow, and of course there’s the added incentive of valuable tax relief.
4. THINKING YOU CAN WORK FOREVER
While you might want to do this, it might not be a realistic prospect. We all age at different speeds and as you approach retirement age you might not feel up to carrying on, and the opportunity to do so might not be open to you.
5. MAKING YOUR PROPERTY YOUR PENSION FUND
Relying on your home to fund your retirement is a risky strategy. It could mean downsizing to release cash and you might find it difficult to sell in a downturn. Plus, you’ve got the expense of finding alternative accommodation.
6. NOT SHOPPING AROUND FOR AN ANNUITY
If you decide to take an annuity, you have the right to shop around to see if you can get a better deal from another provider. Many people settle for what their pension company offers them; while this might be a good option, shopping around may produce a better deal and could mean you’re hundreds of pounds better off as a result, especially if you have any health conditions.
Clifford Osborne are Independent Financial Advisors (IFA) based in Eastbourne, East Sussex, offering pension planning advice,mortgage advice, pension scams advice and more. You can read our VoucherFor reviews here. Our clients often come from Uckfield, Lewes, Brighton, Tunbridge Wells, Hastings, Bexhill, Newhaven, Seaford, Crowborough and further afield.
