A LEADING financial adviser has issued a five-point guide to pension health after government figures revealed 15 million people in the UK are currently under-saving for retirement.
The Pensions Commission says around 45% of working-age adults are not paying in to a pension at all.
Many who are saving are contributing only the minimum required under auto-enrolment, which may not be enough for a comfortable retirement.
According to Rachael Bell, Pra
The Rachael Bell Wealth Management team
ctice Principal of Rachael Bell Wealth Management, millions of people are drifting towards a severe cliff-edge when they retire.
“Fewer than 40% of us are on track for even a moderate standard of living in retirement,” said Rachael. “This ranges from those earning the minimum wage to high earners who are not aware of how much they will need in retirement.
“According to calculations from Pensions UK, the cost of a comfortable retirement – think an annual holiday, meals out, and a car replacement every five years – has risen to more than £43,000 a year for a couple, and more than £31,000 for a single person.
“Meanwhile, the UK’s average private pension pot stands at just £107,000 – a figure that wouldn’t generate even half the annual income required for that lifestyle.
“Don’t wait for retirement to creep up on you. Like every good business decision, the best outcomes come from proactive, intentional planning.”
For good pension health, Rachael advises that people should:
- Start Saving as Early as Possible
The sooner pension saving begins, the longer you’ll have to contribute – and the longer your money has to benefit from compound growth. This is particularly important for business owners who will not be auto-enrolled into a scheme. They are in charge of their own financial future.
- Make Regular Contributions
Try to make consistent pension contributions, and to increase these over time, especially when your income rises. Take advantage of employer contributions if these are available. For an employee, these could be considered as essentially free money. Business owners can enjoy tax efficiencies by making lump sum contributions at the end of a tax year.
- Invest Appropriately for Your Timescale
If you still have decades until retirement, there’s more scope for higher-risk, higher-growth investments. As retirement approaches, gradually shift to lower-risk, more stable assets to protect your savings. A good financial adviser will keep you informed and ensure you have the correct strategy in place.
- Plan Realistically for Your Retirement Needs
Estimate how much income you’ll need in retirement. Consider factors like life expectancy and the effect of inflation on your purchasing power. Review your pension at least once a year, with a view to adjusting contributions, investments, and goals. Consulting a reputable financial adviser will help give you peace of mind.
- Seek the advice of a qualified professional
Professional advice can bring clarity and confidence, helping you make informed decisions and avoid costly mistakes that could impact your long-term financial security. Consider consulting a financial adviser.
Rachael, who works with business owners and senior executives to help them plan and achieve financial freedom in retirement, said: “The figures do not lie, and whilst some have a plan in place and are making the requisite contributions to achieve it, millions are not in that position.
“It’s essential more people start to look beyond the near horizon – and plan for the future they want.”
