The State Pension – the regular income paid by the UK government to those in retirement – is a real source of worry for many. Not only is its weekly income incredibly low, at less than £170 per week (and that’s if you qualify for a full payout), but the State Pension age is slowly rising to 68, meaning a lot of people will have to work for longer. To make matters worse, a recent report suggested that the State Pension age should be increased to 70 by 2028!
I don’t know about you, but the thought of working until 70 has very little appeal to me. That’s why I’m taking steps now to save for retirement so I can retire when I want to. With that in mind, here are three simple moves that could help you boost your retirement savings, and allow you to retire on your own terms, irrespective of the State Pension age.
Contribute extra to your workplace pension
If you have a workplace pension set up, you’ll already be saving for retirement, which is great. However, did you know you can contribute extra to your workplace pension? If you can afford a little extra, you should definitely consider doing so. That’s because the more you contribute, the more you could get back when you retire.
And the government will also provide you with ‘tax relief’ on your contributions – some of the money you would have paid in tax on your income will go into your pension pot rather than to HMRC.
Save into a SIPP or ISA
Another sensible move, if you’re planning for retirement, is to regularly save money in a tax-efficient savings vehicle. This will help you protect your money from the taxman.
One option is to save into a Self-Invested Personal Pension (SIPP) account – a government-approved personal pension scheme. This type of account allows you to hold a wide range of investments and all capital gains and income generated within the account are tax-free. You’ll also receive tax relief on contributions.
Another good option is the Stocks & Shares ISA. Like the SIPP, this account allows you to hold a wide range of investments and all capital gains and income are tax-free. Alternatively, if you’re aged 18-40, you could also consider the Lifetime ISA. This comes with 25% top-ups from the government but it’s more restrictive than the Stocks & Shares version.
Invest your money
Finally, make sure you get your money working for you. If all your money is in cash savings, it won’t grow much. The key is to allocate some of your money to growth assets, such as shares and investment funds, that will generate returns of 6-10% per year and boost your wealth over time. This could help you build up more money for retirement, which ultimately means less dependence on the State Pension.
