Pensions form a key part of financial planning. Everyone has an annual allowance which dictates the maximum tax relievable contribution that can be paid into a pension each year either personally or on their behalf, by an employer for example. By making the most of the reliefs available to you and paying into a pension this can help you build up a significant sum for your retirement when you get there.
For those that start early you could be invested in a pension for 40+ years so it is important to get it right. That being said it is never too late to start and with carry forward of unused reliefs there is the ability to catch up on some of those lost years.
Here are 4 tips which can help you plan for your retirement:-
- Start paying in ASAP
The longer you are invested the more time you are allowing for the investments within your pension plan to grow. Not only that, by starting early you can take advantage of more of your yearly annual allowances as well as benefit from compound interest. To find out more on compound interest click here.
By investing in a mix of assets you can look to reduce your exposure to non-systematic risk as well as having a better chance of preserving and growing your pension plan. Ever heard of the saying don’t place all of your eggs in one basket? This becomes even more relevant as you approach retirement when large valuation fluctuations could have a detrimental effect on your future income plans.
- Plan fees
Particularly older schemes can have high annual management charges and pension wrapper fees and of course the more you pay out the lower your final pension pot could be. However reviewing your pensions may not be as straightforward as you think so please do get in touch today to discuss this.
- Keep contributing!
Continuing to contribute to your plan has many benefits such as making the most of your annual allowance each year, benefiting from available tax reliefs as well as most importantly saving for your future. You can actually continue to benefit from tax relievable contributions up until you turn 75 although there is a maximum fund size known as the Lifetime Allowance to be aware of.
Don’t leave your long-term future to chance. Pensions form a key part of financial planning and if you would like to discuss the above or would like to review your existing pensions or investments please do not hesitate to get in contact today.