However the stats don’t lie and ladies, we gotta wake up and smell the coffee (cause it’s burning). We are living longer, earning less and retiring on HALF THE PENSION of men. More than half of us ladies who hold a pension don’t know where it’s invested and a close to a third of us (37%) don’t know how much it is worth.
Let’s think of your pension as your future freedom fund, because essentially that’s what it is. You’re putting away money now for later and you are going to need enough for the rest of your life (sorry for sugar coating it). And if we think about what ‘later’ means if we retired at 60 and live to 100 (1 in 3 of today’s babies will live to see their 100th birthday) that means we will be needing to live off our pension for 40 years!
So where do we start?
Here are 7 tips to get you started on giving your pension some much needed attention!
1. Start now
When I spoke to our pensions experts from PensionBee, Smith and Williamson, St James Place and First Wealth they all pretty much said that same thing! Start now and enjoy the magic of compound interest. If you don’t have pension – shop around before signing up. Most of you will, because of auto-enrolment, but if you’re self employed you might not.
General rule of thumb for how much you should be contributing into your pension is:
Take your age (for me that’s 30)
Divide by 2 = 15
Turn it into a %. Therefore I should be putting 15% of my earnings into my pension pot.
2. Think about the life style you want
Have a think about what age you want to retire, the kind of lifestyle you want and have a play with a pension calculator from the Money Advice Service. Speak with your parents or older friends who are close to retirement and get clue up on this amount. Are you contributing enough to sustain your life style? When you get a pay rise make sure you increase your contributions.
Royal London (a pension provider) said to not be uncomfortable at retirement you need at least £260,000 in your pension pot by the time you retire …. I’m reading in-between the lines and I think they mean uncomfortable … as poor means beans on toast struggling.
3. Find out how much is in your pension/s
Find out how much is in your pension right now. How do you do that? Call up your pension provider or login online ( a lot of pensions offer an online service now). Ask them what your pension is being invested into and compare it to the average at trustnet.com, if it’s underperforming ask them what are the other investment options. Want to go ethical ask them if they have an ethical fund.
4. Check your matching your employers contributions
Are you making the most of your employers contributions.
Most employers use pension schemes that from April 2018 require a total minimum of 5% contribution to be paid. The calculation for this type of scheme is based on a specific range of earnings. If you’re not making the most of this you could be missing out one ‘free’ money.
4. Save on tax!
The government wants you to put money into your pension ( so they don’t have look after you in retirement) and they are giving you good tax breaks for doing so. If you’re close to a tax bracket increase, put more money in your pension to bring that down.
Also FYI the state pension is going to be around £164.35 a week in 2019 and you can only get that when your 66 and have done 35 qualifying years of National Insurance contributions or credits, so defs have a backup plan…
6. Be aware of scammers
If it’s to good to be true it probably is. There are soooo many scams out there – if someone calls you and says they will give you a free pension review, they can get you better returns on your pension saving or help to release cash from your pension even though you’re under 55 then chances are you’re being scammed.
Check out a list of other popular pension scams!
7. Sort your paper work
If you have like 5 different pensions that’s a lot of admin, get your paper work sorted, and may it is worth combining them. Lost a pension? Call up your old workplace, email them or even google who their pension provider was and track it down! Even if you only think there is £50 that’s still your money, so why not take it back. There is currently an estimated £400 million in unclaimed pension savings.
So there you have it, our tips for getting you started on your pension journey. Remember the only person responsible for your pension is YOU! And you can soooo do this! Also share this post with your gals cause then you can all be enjoying your champagne life style on a cruise ship not beans on toast in a tent!