Looking forward to retirement will probably produce either of two mindsets: hope or worry. The latter will probably spring out of the lack of future proofing, while a more positive disposition will come from an effective and well thought out planning.
This is where planning for your retirement becomes crucial. By knowing the right financial decisions to make, you can future-proof your finances to meet your needs during those times.
Aside from seeking professional advice for retirement planning, saving into a pension is one of the best ways to prepare for your future. Here are two reasons why that’s a venture worth investing in:
- You can enjoy the State Pension only if you’re age 65 or older.
- The State Pension may not be enough to supply for your needs as you retire.
However, with the right investment for your retirement, you can enjoy retirement earlier than the government-mandated pension age.
Tips to Manage Your Pension Savings As Early As Possible
If you are in a hurry to retire and enjoy the fruits of your labour, here are five techniques for you to take control of your pension savings:
- Tally your retirement fund sources
One of the first steps to take in ensuring your financial future is to know where you’re going to get your income during retirement. How much have you saved and what are your investments?
If you’re an employee, it would be a good idea to inquire about your pension statement from your company’s human resources department.
- Start budgeting
Some pension savings may be given on monthly installments, while others pay you a lump sum. Study your retirement savings and evaluate how you’re going to distribute the funds throughout each month of your retirement.
You probably don’t want to spend all of your pension savings in a single go, and then realize later that you’re already strapped for cash.
- Redistribute your fund sources
This technique is especially helpful if you’re still in your 20s to 30s. Start thinking of reinvesting your money into riskier – but potentially higher-paying – funds. For instance, if most of your savings is placed in a managed or balanced fund, you may want to either transfer it to an equities fund or invest it in the stock market.
- Check your funds regularly
It’s a pretty common (but dangerous) practice to invest your money in a number of funds and let it sit there until you reach retirement age. By that time, you might be surprised that financial market shifts may negatively affect your savings, leaving you with less money than you initially invested.
Make sure that you monitor your funds regularly, say once or twice a year. In the case of equity fund, check the value at least quarterly.
- Invest in a Sipp
Self-invested personal pension (Sipp) has become a trend for people who like to have a more active role in managing their retirement fund. Instead of relying on the State Pension and workplace pension provisions, a Sipp allows you to deal directly with the stock market, treasury bonds, and commercial ventures.
This method may be the riskiest of the other tips above, but it’s perfect if you prefer to have total control over your pension savings years before you retire.
Saving into a pension is important, but knowing how to manage and control your fund sources will ensure that your years of retirement will be as hassle-free as you can imagine.
I hope you have found this post on How to Take Control Over Your Pension Savings Early to be useful
feature post – you might also like my post on auto-enrolment