With the cost-of-living crisis tightening pensioner finances, Britons are warned they could be missing out on thousands of pounds in their pensions by not taking the time to plan.
By planning, people may be able to claim extra cash through different investments or lost pension pots which could be the difference between someone having a moderate retirement and a comfortable retirement.
The Retirement Living Standards from the PLSA describe costs in retirement at three different levels – minimum, moderate, and comfortable.
Joe Dabrowski at the Pensions and Lifetime Savings Association (PLSA) said: “A single person will need £12,800 a year to achieve the minimum living standard, £23,300 a year for moderate, and £37,300 a year for comfortable. For couples, it is £19,900, 34,000 and £54,5001.”
Most people will have a combination of State Pension, (which is currently £10,600 at its fullest), workplace pension and other savings to fund their retirement.
As the actual average retirement pension income in the UK works out as £18,772 per year, according to Government figures, those approaching retirement are urged to explore all possible options to boost their retirement pots. To reach a ‘comfortable retirement’ living standards, they will need £18,528 more.
However it should be noted that retirement looks different for all individuals, depending on their goals and lifestyles.
A savings expert has explained “the best method” for saving for retirement. Whether someone is 15 years away or five years away from retirement, they could make a sizeable difference by using the right savings vehicles.
Hetty Hughes, savings expert at the Association of British Insurers (ABI) said: “There are lots of ways to save but a workplace pension is one of the best methods to put money away for retirement.
“This is because your contributions come out of your earnings before tax (so you don’t pay tax on them) and your employer will put additional money in too.
“Some employers will even match contributions above legal minimum levels to supercharge your savings pot.”
She reminded people that it’s never too early – or too late – to get saving into a pension. Even small amounts can add up to very large numbers when returns are compounded over the course of a working lifetime.
She suggested people pay their pension some attention by finding out who their pension provider is, logging onto the online portal and making sure their contact details are up to date.
Alternatively, people could use a pension calculator to find out how much income their pot could provide them by the time they retire.
The Pension Attention campaign is helping to address the importance of people understanding their finances for their future and demonstrates how easy it is to manage their pensions.
Finding old pension statements, logging on and checking contact details are up to date is the first step.
People need to know how much they currently have so they know how much more they need in the future.
It is estimated there are 1.6 million lost pension pots in the UK, worth around £37 billion.
That would mean the average lost pension is worth around £23,000 which could be a huge boost to anyone’s pot. By tracking down a lost pension pot, Britons could live the retirement they want.
It is also worth considering exactly what someone is investing in and whether there are options they’d like to choose to ensure their pension is doing a ‘bit of good’ for the planet too.