If you’re to enjoy the lifestyle you want and deserve in retirement, careful planning is critically important.
After all, you’re not out to simply make ends meet.
After decades of hard work, you want to have a sense of financial freedom and fill your time with your hobbies, passions and priorities.
But many of us can make mistakes without realising it, which can significantly hit our income in later life.
We thought it useful to highlight the ten most common pitfalls that you should avoid…
1.Delaying your pension saving
Starting early is the best thing you can do when it comes to saving for retirement, as you have longer to build up your pension pot.
So don’t procrastinate. Even a small amount can blossom into a much larger sum over time.
2. Not saving enough
What are your goals for retirement? Are you saving enough to achieve them?
It can be tempting to put the bare minimum in your pension, but if you make insufficient contributions as the years pass, you might not have enough to enjoy the comfortable retirement you deserve.
3. Opting out of your workplace pension
If you’re not enrolled into your workplace pension, then you’re missing out on employer contributions, which is effectively free money.
4. Relying solely on the state pension
While the state pension provides a valuable safety net for retirement, it won’t be enough to ensure the standard of living you desire in later life.
It’s, therefore, really important to ensure you have personal pension savings in place to be certain of financial security and quality of life.
5. Dipping into your pension savings before retirement
If you’re under financial pressure, accessing your pension pot to tide you over might be tempting.
But this can lead to you paying more income tax, losing some of your tax-free allowance, and reducing your retirement income in the future.
Instead, you should set up a separate emergency fund so you can be prepared for a difficult situation without jeopardising your future.
6. Not thinking about pension fees and charges
Different pension providers will have their own fee structures, so it’s well worth looking for options that are transparent, competitive and don’t erode your savings as the years pass.
7. Losing track of old pensions
Moving from one job to the next, you can pick up multiple workplace pensions. It’s therefore very important to make sure you know where these old pots are, and perhaps consolidate them into a single scheme so it’s easier to manage.
8. Ignoring pension statements
It’s easy to ignore financial documents when they drop through your letterbox, but make sure you actually read them.
9. Not reviewing your investment strategy
Markets go up as well as down, and the level of risk you’re exposed to will inevitably change over time.
You should, therefore review your investment strategy every few months to make adjustments where necessary, minimise your risk exposure and capitalise on opportunities for growth.
It’s really important that you know what’s happening with your money and that you can make informed decisions about planning for your future.
10. Not taking Independent advice
If you have any questions about preparing for retirement, it’s well worth speaking with a financial planner.
With the help of a regulated specialist in this area, you can take the right steps to ensure you can enjoy a happy, fulfilling retirement.
Get in touch, and we’ll be happy to speak with you.