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We’re living longer – will your pension keep up?

Do you have the joys of life in you today? It may be to do with news from Public Health England – as life expectancies for men and women are now higher than ever. But, although this is great news, it’s important you are aware of what this means for your finances and are prepared that your money may need to stretch during a longer retirement.

Men can now expect to live for another 19 years at age 65 and women an extra 21, according to the figures.

This figure on life expectancy gets higher the older you reach – which means those currently at 85, can expect to live a further 6 years and 7 years for men and women respectively.

The Telegraph calculates that this means women under 65 in 2016 are likely to spend a third of their lives in retirement.

Retirement is hopefully a time to relax and spend your time doing what you want. But you must make sure you have the money to support you during your life. Although it’s very difficult to plan exactly how long you will live for, planning for the best possible scenario means that if you get there, you will have the money to keep the life you want.

Pension tips and tricks

Firstly, it’s worth knowing that although your State Pension will provide a worthy foundation, you shouldn’t simply rely on this to give you the retirement you’re after.

So, to give you a pointer, if you were retired now, the maximum weekly State Pension you would get is £115.95, far below what most people say they hope to retire on.

There’s a range of things you can do to boost your pension savings.

The first and most obvious is to save more if you can. Any additional income you save into a pension will be topped by the taxman – and if you have access to a workplace scheme that your employer contributes to, then it’s possible that if you boost your contributions, your employer may too – it’s worth talking to them to find out.

The best way to think about your pension is as a long-term savings plan with tax relief. This means that as well as the money you’re putting in, some of your money that would have gone to the government as tax now goes into your pension pot instead – providing you with a nice little boost.

If you have many different pension pots, there could be something to be said about consolidating them all into one as well.

This may help open up a wider range of investment options and you may save money if you’re transferring money from a high-charge scheme to a low-charge one.

 

I’m already retired, is there anything I can do?

If you’re already retired, this doesn’t mean your financial situation is doomed. There are still things you can do.

For example, if you own your own home, this can often represent a large proportion of your wealth, which you may be able to access through equity release.

You should also make sure you have got all the workplace pensions you are entitled to. It is surprisingly easy to lose track of all of your pension pots – especially if it is from a scheme early in your career.

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  • Charles Ogle Emery / 8 March 2016

    I am a pensioner, worked for 45 years, planned and saved for the future and paid all my dues, pensions and tax. My savings are now diminishing in my ISA and in government tax exempt National savings. Now the tax office have declared that these low interests on savings lead the reductions of my tax free allowance , so I am being taxed indirectly on tax free savings.

  • Taras Tymofijiw / 7 March 2016

    I'm not a higher rate tax earner. So how can I 'enjoy' the tax advantages of pension relief when the returns on the pension investment are so meagre and mine fielded with plenty of penalties should I withdraw from one pension pot and consolidate to another?. I know! I'll keep working till I drop to help out all those higher rate taxpayers with aggressive investment portfolios