Pensions make many people glaze over or ‘ostrich’, sticking their head in the sand.
Some too sceptical to seek professional advice leave it late or they DIY, which is prone to many pitfalls.
A common misconception is thinking employer’s pensions will be adequate or that these cannot be improved upon.
The self-employed and business owners often never get around to making provisions; leave valuable old pensions languishing, or have too much faith in a future business sale.
Some people also expect that their home will provide retirement wealth but in practice, many rarely downsize.
Equity Release ‘Version 2.0’ can be ‘drawn-down’ to supplement retirement income but may not be sustainable or adequate.
The huge expansion of the Buy-ToLet (BTL) market suggests too many are reliant on that one asset.
Late joiners to BTLs may also not appreciate tax changes which made it less attractive.
State pensions pay a maximum of around £10,000 per annum now from age 67; that doesn’t help early retirement ambitions.
Something must meet the shortfall when the typical average annual income needs are around £25,000 for a ‘comfortable’ retirement and an additional £10,000 for ‘luxury’ lifestyles.
For people with surplus earnings, remember to check whether your employer ‘matches’ additional pension contributions above the basic minimum; effectively it’s free money invested into your pot.
Old and existing employer’s pensions should be reviewed, changes to investments considered and if suitable, some allow money to transfer to perhaps a more competitive, better-invested pension.
Up to an hour’s free initial adviser consultations are usually available to review your options and prior preparation will help to make the best use of it.
The sooner you begin, the less chance of disappointment at retirement.
Enjoyed this? Read more from Duncan Martinus, HF Wealth