‘Biggest risk!’ Britons issued stark warning as many could miss out in retirement
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It comes as women have been told the are at risk of missing out on their retirement goals because they have not been able to plan for them. Lack of funds, competing priorities and limited knowledge on how to save were all cited in a Fidelity study which expressed concern about retirement preparations.
Express.co.uk spoke exclusively to Emma-Lou Montgomery, associate director at Fidelity International about what steps both women and men can, and should, be taking at this time.
She said: “Saving for the future, whatever your age, can feel particularly tough in the current climate, with household bills, record inflation and general day-to-day costs all going up. But that doesn’t mean it’s any less important.
“What you do – and just as importantly don’t do – now will impact on your future.
“It’s about thinking cleverly on two levels – how you both handle the rising cost of living day-to-day and keep an eye on your future.”
Ms Montgomery suggested one of the first steps people can take is to set a regular savings goal.
For example, while individuals can save up to £20,000 into an ISA, it is probably better to start with a manageable monthly sum.
Starting small and then building up into a substantial pot is likely to make the idea of saving money more palatable and easier to achieve.
It is vital for people to feel in control of their finances, and Ms Montgomery suggests taking stock of income and outgoings is key.
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She added: “Doing this, especially in the current climate may feel uncomfortable, but it’s the best way to construct a clear budgeting plan and identify areas where you can save money, and use those to boost your future savings.”
But it is just important for Britons to consider their long-term goals, especially as they look towards retirement.
Ms Montgomery suggests Britons should consider what they want their retirement to look like.
From there, they will be able to work out the income needed to achieve this, and whether their goals should be readjusted.
Given the ongoing cost of living crisis, Britons may need to think about their retirement more significantly – especially if they are mere years away from this goal.
Ms Montgomery continued: “Ideally, your plans should allow you to cover the of essential spending with income that can rise as prices do.
“That could mean using some of your pension pot to buy an annuity that gives you some fixed income and can even offer some protection against inflation. You can get an annuity that pays an income linked to inflation – but that comes at a cost. Or it might simply mean leaving your pension pot invested for longer.”
But regardless of the steps Britons decide to take, acting rather than taking no action at all is the most important.
Without a clear understanding and careful plan of how one wants their retirement to look, there could be devastating consequences.
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Ms Montgomery said: “The biggest risk is that your savings will fall far short of what you need.
“This can lead to you having to drain your savings and/or lean on family or friends for financial support and it can take a real toll on your mental health.
“Don’t forget too that your responsibilities like raising your children or caring for relatives won’t disappear overnight. Nor would we want them to.
“Many of us will have had thoughts about gifting money or eventually leaving money to loved ones.
“The good news is that your future is in your hands. You stand the best chance of achieving all your retirement goals if you get your hard-earned money working as hard as you can, as soon as possible.”
Fidelity has suggested that increasing pension contributions by one percent ca help women achieve their goals.
Starting saving as early as possible is important, but increasing contributions is also viewed as a good way of accelerating towards a comfortable retirement.
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