Recent figures published by Professional Adviser suggest that more than 1 million working Brits expect to never retire. Almost half – amounting to more than 17 million people – expect to work beyond State Pension Age.
While this marks a 7% decrease compared to last year, the continuing impact of the pandemic on people’s retirement plans is being felt. A separate report from Aviva has found that 54% feel that Covid has affected their retirement prospects.
Whether you’re approaching retirement, in retirement, or have children currently saving toward their pension, professional financial advice can help to remove these worries.
Keep reading to find out how.
Reasons for working beyond State Pension Age vary, but 3 main worries are common
As the government announces a review into whether the State Pension Age should rise sooner than originally planned, the introduction of the Health and Social Care Levy means those working beyond State Pension will be asked to pay National Insurance for the first time.
While for some, the choice to continue working will be connected to the social life of employment, for many more the decision will be made due to financial necessity.
Research reveals that those thinking about a working life beyond State Pension Age are worried about the prospect, with:
- 34% most concerned about being unable to enjoy their old age
- 33% most worried about the toll their continued working will take on their health
- 27% expect that they’ll either need to or want to work, but fear that their deteriorating health will make it difficult to do so.
More worryingly, 43% expect their pension to be too small to allow them to retire. The effects of coronavirus are likely to be at least partly responsible.
The financial hardship of lockdown, furloughing, and redundancies led many to suspend pension contributions and with the cost of living on the rise, restarting contributions at pre-pandemic levels won’t be easy for many.
Related to the pandemic is the number of changes to pension thresholds and freezes to allowances that the government introduced last year in a bid to recoup their Covid spending.
A freeze to the Lifetime Allowance and the suspension of the State Pension triple lock has led to 87% of Brits saying they had no confidence in the government’s handling of pension policy, according to FTAdviser figures.
Financial advice can help you and your loved ones take some simple steps to help ensure you stay on track to achieve your retirement dreams – whatever pension policy and the global economy throw at you.
How to make the most of your pension contributions, whenever you start contributing
1. Remember that it’s never too late to start contributing
It’s never too late to start contributing to a pension or to increase the contributions you make. If you are worried you might have to compromise on your dream retirement, get in touch now.
We can help you to make the most of the money you have. That might mean managing disposable income or using the tax efficiencies built into the savings and investments products you have.
2. If you’re still working, remember your employer’s contributions
With many Brits planning on working later in life, you might be working to supplement income from elsewhere. While the pandemic led to many decreasing or suspending their workplace pension contributions, this is rarely a good option.
You’ll be missing out on contributions paid into your pension by your employer, as well as the pension tax relief on contributions and the potential growth of your larger pot. Making contributions right up to the point of retirement is the best way to make the most of your pension’s tax efficiencies.
3. Make the most of the State Pension
The State Pension for the 2022/23 tax year is £185.15 a week or £9,627.80 a year. You’ll need to keep an eye on both the State Pension Age and your National Insurance contributions (NICs).
Currently, the State Pension Age stands at 66. It will rise to 67 by 2028 and is due to rise to 68 between 2044 and 2046. A recent government review, however, could bring this forward to 2037 and 2039. This could directly affect your plans if you were born in the early 1970s.
You’ll also need to think about the effect of NICs if you continue working beyond State Pension Age.
Check your National Insurance record and speak to us about incorporating your State Pension into your current retirement plans.
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