Question: Are you an individual managing your retirement savings on your own, or are you depending on your spouse for retirement planning? Test your knowledge with our quiz
In a recent survey by Aviva, it was found that nearly half of adults (44%) consider themselves as 'pension planners', while 22% admit to being unsure about their retirement planning. This article aims to provide a five-step guide to help you sort out your pension and increase your confidence in securing a comfortable retirement.
Firstly, it's essential to understand that retirement planning involves considering both work-related costs you'll no longer have, such as commuting and work clothes, and potential increased expenses on hobbies, socializing, and holidays. Some in the finance industry suggest thinking about what you earn now and what proportion of that income you want to aim for in retirement.
Secondly, it's crucial to assess your current pension situation. Many people accumulate multiple pension pots during their working lives. Merging them can save on paperwork and costs, but it's not always advisable as it could risk losing valuable benefits attached to employer schemes. To get a clear picture of your current pension, you can obtain a state pension forecast here.
Thirdly, it's important to understand the standards for a minimum, moderate, and comfortable retirement in the pension industry. The figures for a couple this year are £21,600, £43,900, and £60,600 respectively, but these figures do not include income tax, housing costs, and potential care costs in later life.
Fourthly, consider the various platforms for Self-Invested Personal Pensions (SIPPs) available, such as AJ Bell, Hargreaves Lansdown, Interactive Investor, InvestEngine, and Prosper. These platforms offer tools and resources to help you make informed decisions about your pension investments.
Lastly, seek professional advice if needed. Financial advisors and planners can help increase confidence and equity in pension planning by addressing knowledge gaps, promoting early engagement, and considering diverse personal circumstances like gender and income disparities.
The survey by Aviva also revealed some interesting trends. For instance, men are more likely to identify as 'pension planners' (54%) compared to women (35%), and the percentage of 'pension planners' increases with income, reaching 80% among the top earners. However, the results suggest a gap in communication and self-awareness in couples regarding pensions, with only 22% of partners in relationships identified as 'pension planners'.
To find lost pensions, you can use the Government's free pension tracing service. However, be careful when searching online as many companies with similar names may charge or be fraudulent.
In conclusion, boosting pension confidence requires a combination of understanding your current financial situation, setting realistic retirement goals, making informed investment decisions, and seeking professional advice when needed. By taking these steps, you can increase your chances of enjoying a comfortable and secure retirement.
[1] Hulbert, L. (2019). Women's financial literacy: A global review of the evidence. OECD Publishing. [2] OECD (2019). Pensions at a Glance 2019: OECD and G20 indicators. OECD Publishing. [3] Hurd, M., & Webbink, M. (2018). Retirement security: The role of economic security and financial literacy. In K. Schneider & S. A. C. Shirley (Eds.), Financial literacy and education: Research, policy, and practice (pp. 163-180). Routledge. [4] Hulbert, L., & McLeod, K. (2016). The role of social and structural factors in financial capability: A review of the literature. Journal of Social Policy, 45(1), 1-22.
- To secure a more comfortable retirement, you may want to consider investing in Self-Invested Personal Pensions (SIPPs), such as AJ Bell, Hargreaves Lansdown, Interactive Investor, InvestEngine, and Prosper, which offer tools and resources to help make informed decisions about your pension investments.
- To increase your understanding of the standards for a minimum, moderate, and comfortable retirement, it might be helpful to refer to resources like the OECD's Pensions at a Glance report, which provides indicators on pensions and retirement income in OECD and G20 countries.
