If you’re in your mid-50s and you don’t have much money saved for retirement, you’re certainly not alone. A recent study by financial services group Aegon found the average 55-year-old Briton has retirement savings of just £105,000, while another study by Skipton Building Society found one in 10 adults in the UK over the age of 55 doesn’t have anything saved for retirement at all.
Having no savings in your mid-50s isn’t ideal, as retirement is not that far off. However, there’s still time to build a nest egg that will support you in your later years. With that in mind, here’s a look at three smart financial moves that could help you boost your savings and salvage your retirement.
Saving into a SIPP
One of the most effective ways to save for retirement is via a Self-Invested Personal Pension (SIPP) account. This is a government-approved retirement account that’s tax-efficient and allows you to hold a wide range of investments.
The main advantage of saving into a SIPP, as opposed to just saving into a regular savings account, is that the government will reward you for saving for retirement by topping up your contributions. This is known as tax relief. Basic-rate taxpayers are entitled to 20% relief (higher-rate taxpayers can claim even more), meaning if you contribute £800 into a SIPP, the government will add in another £200 for you.
Tax relief really is a super deal, so if you’re looking to boost your retirement savings in your 50s, a SIPP could be a good place to start. Currently, you can contribute up to £40,000 per year, or 100% of your income if you earn less than £40,000, into a SIPP and qualify for tax relief. Be aware, however, that you can’t touch money in a SIPP until your turn 55 and, at that stage, you can only access 25% of the money tax-free.
Saving into a Stocks & Shares ISA
Another option to consider is saving into a Stocks & Shares ISA. The advantage of this type of account is that it’s very flexible. Not only can you hold a wide range of investments, but you can access your money at any time. Additionally, all income and capital gains you generate within the account are sheltered from the taxman, meaning your money can grow free of tax-drag.
Currently, each individual can put up to £20,000 per year into a Stocks & Shares ISA, meaning a couple could potentially put £40,000 per year away for retirement completely tax-free. This is another great deal that shouldn’t be ignored if your goal is to boost your retirement savings.
Investing in the right assets
Finally, if you’re looking to grow your retirement savings, it’s important to invest in the right assets. Here, it’s all about balance. On one hand, you don’t want to take huge risks with your money at this stage of your life. On the other hand, you do need to get your money working for you, so some exposure to growth assets, such as stocks and funds, is sensible, as these kinds of assets are likely to outperform cash savings over the long run. If you’re looking to learn more about investing for retirement in your 50s, you’ve come to the right place.
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