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Home > Blog > Pensions > How To Boost Your Pension In The Run-Up To Retirement
In the run-up to retirement, many of us will naturally start to worry that we might not have enough funds to live comfortably after we clock off for good. But don’t panic! There are plenty of ways to boost your pension and maximise your nest egg. Hilltop Finance has curated six effective pension top-up tactics you can implement as you prepare for retirement.
Financial writer Jonathan Clements once said: “Retirement is like a long vacation in Las Vegas. The goal is to enjoy it to the fullest, but not so fully that you run out of money.” Clement’s words may resonate with you more than most if you are nearing retirement. Perhaps you have decided to retire earlier than planned, or maybe you fear there aren’t enough funds in your pension pot to comfortably see you through your retirement years.
Whatever your reasons, it isn’t uncommon to want to boost your pension. Here are six ways to do it:
The maximum State Pension available to retirees is currently £185.15 a week or £9,628 a year. However, you will need at least 35 qualifying years of National Insurance payments to qualify for the maximum State Pension. If you have any gaps following a career break, you might want to supplement your State Pension by making additional voluntary contributions. The benefits will almost certainly outweigh the costs involved.
Few people pay attention to the finer details of their pensions, particularly if they have been auto-enrolled in their employer’s de facto scheme. However, the provider fees associated with your workplace pension could limit your retirement income’s full potential. So it might be worth seeking a pension review from a regulated financial adviser and discussing the possibility of making a pension transfer to a more cost-effective scheme.
Increasing your pension contributions is one of the most effective ways to boost your pension. If you are employed, your employer is obliged to pay a minimum pension contribution of 3%. But it could be worth asking if they will match your contributions for a handy pension top-up. If you are self-employed, it is worth paying into a private pension for the tax relief. This effectively refunds a portion of the income tax you pay HMRC.
Research by Zippia suggests that the average British worker now changes jobs 12 times during their lifetime. That means there are a lot of pension pots floating around. In this case, consolidating your pensions into one pot could be the answer. Not only does a pension consolidation reduce the number of accounts you need to manage, but it can also reduce your fees and broaden your investment opportunities moving forward.
Millions of people are receiving less State Pension than they are entitled to due to errors by the Department of Work & Pensions (DWP). This includes an estimated 237,000 married, widowed and divorced women who reached State Pension age before April 2016 and are owed around a total of £1.5 billion. It also includes underpaid pensioners over 80 eligible for an uplift. Contact the pension service directly if you think you are affected.
Claiming every available tax relief can give you a significant pension boost in the run-up to retirement. However, whilst the basic rate tax relief of 20% is automatically applied to annual earnings of up to £50,271, higher earners with a take home up to and beyond £150k need to actively claim for higher rate tax relief (40%) or additional rate tax relief (45%) respectively. This can either be done via your online self-assessment or by contacting HMRC.
In the run-up to retirement, it can be reassuring to know that your pension pot and resulting retirement income are as healthy as possible. We have given you six practical ways to boost your pension to help you prepare for retirement as thoroughly as possible. Just a few of these simple tweaks could make all the difference if you are looking for one final pension top-up to ensure you enjoy many years of comfortable retirement.
If you would like more advice about retirement planning or to arrange a consultation, please contact us on 0161 413 7051. We are open 9am to 5pm Monday to Thursday and 9am to 4pm on Fridays. Hilltop Financial Planning is authorised and regulated by the financial conduct authority. Our advisers have over 100 years of combined experience and knowledge of working with people like you and helping them to make the most of their finances.
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