With just 10-15 years until Generation Xers reach the traditional retirement age (60 to 65)3, Portafina’s research revealed that more than one in ten don’t have a pension (13%)1, leaving almost four in ten (38%) concerned they will not be able to cover their bills with their monthly retirement income2.
Jamie Smith-Thompson, Managing Director of Portafina has provided five top tips for Gen Xers to boost their pension pots now, helping 45-54s to take positive action to improve their future finances.
1. Top up your pension, whenever you can.
Whether you make small regular payments, or pay in a lump sum, anything extra you can add into your pension will make a positive difference to the size of your pot at retirement.
2. Don’t opt out of your workplace pension scheme.
One of the biggest benefits of a workplace pension is the money your employer pays in on top of your own contributions, together with tax relief, giving your pension pot a nice additional boost. It’s extra money you won’t get from any other type of savings accounts.
3. Work a bit longer, if you can.
Deciding to work even a few extra years will give your pension more time to grow. The longer your pension is invested, the more it benefits from compound interest. And your contributions continue to receive tax relief during those extra years too.
4. Check how much State Pension you are entitled to.
How much State Pension you will receive is dependent on how many years you have made of qualifying National Insurance (NI) contributions. This is particularly important for Gen Xers who may have fewer qualifying years on their NI record if they contracted out of National Insurance contributions via SERPS. If you are missing any years, it is possible to make voluntary NI contributions to top up the amount of State Pension you will receive. You can check your State Pension forecast on the Gov.uk website.
5. Give your pension a check-up.
Gen Xers should be regularly reviewing their pension. If it’s been over two years since you last checked yours, ask your pension provider when your next annual review is due. It’s important that your pension remains tailored to you as you approach retirement as the level of risk your investments take could be considerably different to someone in their thirties. And if managing your pension and understanding your options feels complicated, a regulated financial adviser can help make things clearer.
Jamie added: “We know from our own clients that 67 remains the age most people earmark as their planned retirement age. That means there is still plenty of time for Gen Xers to make a noticeable difference to their future pension income.
“There are more options than ever before when it comes to how and when you can take your retirement savings, including the option to take money from your personal pension from the age of 55. As some Gen Xers are already at this age, it is even more important that they understand the impact that taking money from their pension early could have on the amount they have to live on in their retirement.
“If you’re not already receiving regulated financial advice about your retirement savings, now would be a good time to speak to someone. A regulated financial adviser can look at how your current pension is performing and compare the market for you to see if there is a better product available to you.”
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