Are you looking forward to retiring from the world of work? A pension scheme provides a way to save money for your income later in life. Retirement no longer stands at a set age and working beyond retirement age is becoming more popular as you don’t have to pay National Insurance contributions and delaying drawing a state pension means that you’ll have more money when you do choose to finish work. What are the options for pension schemes? If you want advice about pensions and retirement planning, there are firms that offer this, including Pensions & Wealth Management Services. If you’re strapped for cash, there are plenty of ways to make your retirement more comfortable, so start planning ahead.
Private pensions fall into two categories; workplace pensions and personal or stakeholder pensions. Workplace pensions are arranged by your employer and usually both parties pay into it. You will receive a regular income and/or a lump sum. This may come from money invested in the stock market or from the pension provider that your employer uses. A personal/stakeholder pension is something that you pay into privately. The amount you receive depends on how much you put in and how healthy the investment is.
There are three kinds of state pensions. The basic state pension is a regular payment from the government dependent on your National Insurance contributions. The current maximum is £110.15 per week. The additional state pension is an extra on top of the basic state pension. This is not a fixed amount and depends on your earnings and whether you claim certain benefits. The pension credit is designed for people on low income. It is currently standing at £145.40 per week but can be higher if you a carer or seriously disabled.
Six months prior to retiring you should contact your pension providers to find out what your final pension will be and how it will be paid. It can be a good idea to consolidate all your workplace and personal pensions in one place if you think your investments aren’t performing as well as they could be. It makes buying an annuity easier but can also incur exit penalties.
How do you want to take your pension? Most people buy an annuity (a guaranteed amount is paid per month) and if this is the best option for you, remember to discourse any health conditions as this could increase your income.
Plan Your Budget
How much do you think you’ll spend during retirement? Planning your budget can make things much easier and really set your mind at rest if you’re worried about not having enough money. Most retirees don’t spend as much as when they were working, although there are usually spending increases on things like heating of the home and leisure activities. In the UK, you will be eligible for free travel on public transport, so don’t forget to register for this. If there are shortfalls, it’s better to work these out sooner rather than later! If you’re collecting a state pension, you can buy National Insurance for years you perhaps missed out on if out of work or staying at home with children. State pension forecasts are available online.