Figuring out how much you’ll need to see you through retirement can be a complicated business.
And with 2 in 3 retirees worrying they’ve not saved enough before retiring, you’re not alone in being concerned about your savings.
If you’re nearing retirement age and looking for ways to make your money go further, we’ve put together a few ideas to help.
Defer your pension
One action that will have the most influence over your future income is if your circumstances mean you can defer claiming your pension – both private and State.
For every week that you defer your State Pension, the amount you’ll get when you do claim goes up. This works out as an annual increase of between 5.8% and 10.4%, depending on when you reach retirement age 1.
With most private pensions, you’re not tied to a set retirement age. So you can leave your money invested and continue paying in if you want.
This will mean extra investment towards your future and more time for your fund to potentially grow. But remember that the value of investments can go down as well as up and you could get back less than has been paid in.
Continuing to work
Choosing to continue working past retirement age, whether full-time or part-time, is an increasingly popular choice.
In fact, the number of part-time employees over the age of 65 doubled between 2009 and 2015 2.
If you decide to keep working, continuing (or increasing) your pension contributions could be a smart move. You’ll immediately increase the value of your contribution by at least 20% due to tax relief and you can start to claim your pension as soon as you’re ready.
Reducing your outgoings
Whether you’re in the run-up to retirement or already claiming your pension, cutting back on some items could make a big difference to your budget.
To start, draw up a list of your income or expected income and your outgoings. You’ll then see if there’s a gap and identify where you can cut back.
Using your home
Some people choose to use their house as their nest egg – so could you consider releasing some of your home's value as cash?
If you're able to downsize, you could end up releasing a lot of money.
Alternatively, with a lifetime mortgage, you can receive a lump sum payment based on your home’s value, without moving out. It could give you a much-needed boost to your pension income. This is known as equity release.
It's important that you consider the benefits, costs and risks carefully before deciding whether a lifetime mortgage, or other equity release product, is right for you.
Calculate your retirement income
While you’re making these decisions about your future, it’s helpful to know exactly where you stand with the savings you have.
Use our retirement calculator to get a good idea of the income you can expect and plan accordingly.
A smaller-than-planned pension pot needn’t mean you can’t have a comfortable retirement – it just takes careful planning.