Question: I’m going to be 50 next year, and so far, I have saved about £18,000 in a workplace pension. I have been automatically enrolled since 2016.
I hadn’t really thought about my pension until now.
Beyond this, you should write down a monthly budget and think about whether pension saving is your priority for any spare cash you have. Most people want to get an emergency pot sorted first to cover off any unexpected expenses, then think longer-term towards things like pensions and investment ISAs.
Whether you opt for your workplace pension or a SIPP, there are a number of things you should think about before making this decision. Costs and charges are always important, as these are one of the variables you can have absolute control over and can have a big impact on the final value of your retirement pot.
On the other hand, workplace pensions often have relatively limited investment choice and may not offer the same level of flexibility you can get in a SIPP.
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When pension savers get to age 50, they get a document from their pension provider that gives a summary of their pension – a ‘wake-up pack’.
This could include how to generate an income and the retirement lifestyle they want. This all feeds into how much someone could contribute in the run-up to retirement and how much investment risk they might take.
It’s important to remember that these are only a guide, however, and the size of pot you need to fund your retirement spending will vary from person-to-person.
As you started retirement saving relatively late, it is important not to be put off by these numbers – any contribution you can afford to make to your pension will help boost your quality of life in retirement, as well as benefitting from generous pension tax relief and tax-free growth.
The Government also offer a free, impartial guidance service – Moneyhelper. The guides can be very helpful in figuring out the basics of retirement saving and the things you need to consider when taking an income.
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