Take the guesswork out of your pension puzzle

Do you have a clue what you’re likely to live on when you finally decide to call time on your working life? Have you got all the pieces in place now to help pay for your future? We take a look at four ways to help take the guesswork out of the pension puzzle.

Sorting out the pieces

You are likely to have a pension associated with each job you’ve had during your working life. It can be tricky to keep up to date with all of these separate ‘pension pots’ (especially if you left the job/s many years ago) but bringing all the pieces together so you have a more complete picture, can really help with planning effectively for your later life. Why not request up to date statements from all your pension providers so that you have a realistic idea of how much you can expect when you retire? You can also track down any ‘lost’ pensions with the Pension Tracing Service.

Make sure the corners and edges are in place before filling in the middle

When you are working out how much income you will need in retirement, consider your current outgoings, and decide which you think might go up, down or stop when you retire. You may have paid off your mortgage or downsized which will reduce your monthly bills, but on the other hand you may plan to go on holiday more often, socialise with friends or spend time travelling which could cost you more.  It’s never too early to start budgeting so that you have a clear picture of the income you’ll need, and work towards achieving it.

How long is the puzzle going to take?

In general, we are all living longer, healthier lives. For some of us that might mean working for longer, either out of choice or because we need to, and for others it might mean a phased move into retirement working part-time or reduced hours. However you imagine what stopping work will look like, you should bear in mind the impact that a reduced salary or working for longer could have on your income.

Have you got enough pieces to complete it?

It’s all very well planning ahead, but what if you can already see a shortfall in your retirement expectations? There are a number of options which can help, including:

• delaying your retirement date and continuing to pay into your pension savings for longer
• increasing your payments by a small amount each year as soon as you can to reduce any deficit
• lowering your expectations – accept you might have less than you’d hoped for and think about more careful budgeting
• reviewing any other savings you have (ISAs for example) to make sure they are the best place for your long term savings

Whatever your age, and wherever you are on your savings journey, 4me has interactive tools and short informational videos to help you put the pension puzzle together. Find out more about how 4me can help you here.