Key Steps to Revive Your Pension Pot
The top three ways to revive pension pots for those on the cusp of retirement or who are recently retired are 1) to review the pension strategy annually, 2) to know the pension’s benefits and when they will become payable, and 3) to be aware of pension charges, according to one of the world’s largest independent financial advisory organisations.
deVere Group, which has 80,000 clients and $10bn under advice, releases its ‘retirement planning kickstarter tips’ as the charity Age UK today (25 June) publishes its ‘Financial Resilience in Later Life’ report in which it is concluded that ‘financial MOTs’ are now critical for older people to help them navigate retirement that can now last for four decades.
Retirement Challenges Baby Boomers Face
Reece Fallaize, deVere Group’s Senior Technical Manager, comments: “With life expectancy increasing, financial support from the State dwindling, the cost of living, medical and care set to rise further over the longer-term, rock bottom interest rates and annuities, many so-called baby boomers are coming to a depressing realisation: there just might not be enough in their pension pots to last throughout their retirement, or enough to enable them to enjoy the retirement they had envisaged.
Top Three Retirement Planning Kickstarter Tips For Baby Boomers
“Naturally, for those in their 20s and 30s, the key to avoiding this issue would be to start saving as much as possible as early as possible in order to accumulate a larger pot. But how can those who have recently retired or who are about to kickstart their retirement planning and potentially avoid having to considerably downsize their retirement ambitions and lifestyle?”
Mr Fallaize explains: “Typically, it comes down to safeguarding and maximising your pension.
Retirement Planning Kickstarter Tips Explained
“The first tip is to review your pension annually, just like a company produces accounts on an annual basis and can plan ahead based on those results. Markets are constantly changing therefore your pension should reflect the current and forecast market conditions for optimum results.”
“The second tip is to know the benefits of your pension. What will your income be? What is it likely to be in the future? And, more importantly, when can you receive it? What about a spousal pension and a guaranteed minimum pension? Knowing exactly what benefits you have or don’t have will enable you to plan ahead more effectively, and subsequently make other suitable arrangements if necessary.
“And the third tip is to be aware of pension charges, or to be broader be aware of ‘pension costs’, which are all the things that erode your overall pension income. These are namely charges, inflation and, of course, taxation. We often find individuals who are content with 2 to 3 per cent growth per year, but once we factor-in charges and inflation the real value of their pension is being decreased annually.
Understanding Pension Charges and Costs
“As a starting point, people should find out what charges you are paying and see if you are getting the best deal possible. Charges alone can make a significant difference to your overall retirement income.”
Embracing a New Era of Retirement
Reece Fallaize concludes: “The world has changed in recent years – and baby boomers are the first generation in a new era of retirement. Many people are now retired for more than a third of their lives and retirement planning strategies have to reflect this fresh reality.
“By following these tips, baby boomers should be on track to revive and boost their retirement plan and keep it in-check.”
