And why you should do something different!
Ever felt like you’ve left it too late to get your pension sorted? Wondered how you are going to ever have enough for your retirement?
It doesn’t help when the Press are constantly feeding us frightening tales of how little we are saving either…
You’d have thought that, as a Chartered Accountant and Corporate Treasurer, I’d have my pension all sorted and planned out well in advance of reaching my silver years. Well, actually you’d be wrong – I had just been doing what so many of us do – paying the minimum into my pension each month, concentrating on juggling, life, work, kids, not really giving it any thought at all.
When I hit 50 I thought I’d do a health check on my pension, given I knew roughly how much I spent. It couldn’t be that bad could it?! I pulled out all my old pension statements, found out how to get predictions for French pensions (I worked there for 4 years too, and with French Admin this was not easy task) and worked out what they were worth.
Actually, it was worse than I thought, much worse. The small final salary schemes I had were actually VERY small, and the pensions I had been building in defined contribution schemes had been languishing in default funds with a lacklustre performance. I’d be lucky to get 50% of what I needed by the time I was retired. I was horrified – I wanted to have a decent lifestyle, enjoy nice food and wine and family holidays, as I could now. Plus, I didn’t want to work till I was 75, I wanted to maximise the fun whilst I was in relatively good health (fingers crossed!).
So, I had to act, and fast. Here’s what I did:
· I engaged a Financial advisor for a one-off session to review my current portfolio and changed my investment strategy, which really helped kick start growth.
· I created a realistic budget for retirement and worked out what I’d need to get that amount in terms of a pot.
· I redirected mortgage overpayments to my pension instead as I worked out that, with low rates at the time, I could probably earn more on the stock market.
· I became a lot more intentional about our spending.
· Then I maximised my pension contributions as much as I could, knowing that I’d get tax relief on every £1 I put in.
Pensions are such a tax efficient investment – remember you get tax relief at your ruling tax rate, so if you’re a basic rate tax payer and put in £80, the Government makes it up to £100 (on current rules at the time of writing)
Fast forward 8 years, and I managed to take a year’s unpaid sabbatical from work, and also saved enough in my pension to leave my Corporate job and go it alone as a Financial Coach. It’s not really retirement (I hate that word) but I am doing what I love, travelling a lot and I have a lot more financial flexibility than I ever thought possible. Just because I took that deep breath and faced those dreaded pensions…
So, if you’d like to get your pension sorted, please get in touch for a free 30 minute call, and we can see if I can help you.
In my regular blog I’ll be looking at some of the topics around money that come up the most frequently. If you have any you’d like me to address, feel free to get in touch.
Here are some useful calculators, and if you would like a chat about ideas on growing your retirement fund, book an initial chat here.
Vanguard pension calculator
Standard Life pension calculator
Moneyhelper Government calculator. (please note, this looks at how much you’d need to buy an annuity rather than drawdown)
Important note
This blog is for education and information purposes only and does not constitute financial advice. If you need specific advice, please reach out to one of the many excellent financial advisors in the UK.
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