How to boost your retirement fund
The State Pension is currently worth a maximum of £185.15 per week in the 2022/23 tax year. As this may not be enough to support your lifestyle after you are no longer able to work it is recommended that you create a retirement fund for yourself. It’s never too early or too late to start this fund. Even if you are just starting out saving for retirement and have a long period of work ahead or you are nearing the age of retirement, focus on your saving as much as you can.
If you are closer to retirement age than graduation then these tips could help to boost your retirement fund a little and top up your pension pot.
1. Concentrate on regular savings
Make sure that the first thing you do each month is pay your future self via your pension. Even if you can add an extra £10 or £20 into your pension pot each month this will really add up over the years. For example, if you are 47 and you plan to retire at 67, saving £40 per month into your pension for 20 years with a 5% annual return on investment, your pension pot would be over £16,000 by the time you’re 65. This boost would be on top of your usual contributions and your employer’s contributions.
Of course you should always calculate how much you think you may need for retirement to make sure that you are saving enough and remember that these numbers are just an example to show that pensions benefit from compound interest and actual investments will of course fluctuate.
2. Combine pension pots
If you have had more than one employer over your career then you could have more than one pension and combining them together could make it easier for you to see your total fund. Make sure to check what type of pension they all are before you move them as you could be charged. Seek financial advice on this if you are unsure.
The Government has a page that can help you find lost pensions.
3. Other savings
Do you have other savings accounts as well as your pension? Don’t forget to include these when you think about your overall retirement fund. Investigate whether you could move your savings to a different account and benefit from a cashback offer or a higher interest rate to boost your overall pot.
4. An extra year or two?
You don’t have to retire when your employer tells you to if you think you may want or have to continue working, in order to afford retirement. The longer you defer your pension for, the more time it has to generate more income. Make sure to let your pension provider know that you are planning to retire later.
5. Big boosts
If you receive inheritance, a lottery win (if only!) or even sell an asset that you no longer need such as a car, you can add this lump sum into your pension pot to benefit on the growth.
6. Side hustle
This is what millennials are calling a part time job or running your own small business on the side of your regular income! Bear in mind the additional income tax that will apply and speak to HMRC if you need advice. You could make some extra pocket money by taking up another smaller job or even selling your wares or a service such as homemade cards, restoring antiques, gardening or even dog walking. If you have a talent or skill and want to share it with others you could easily make an extra few quid to pop into your pension pot each month. There we have 6 ways to boost your retirement fund and ensure that you are as comfortable as you can be later on in life.
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