The start of a brand new year is a great time to get your finances in order. One of the biggest parts of your financial journey will be your pension. So it’s worthwhile doing an occasional check-up to make sure you’re on the right track.
I’m going to explain some top pension resolution tips that you can use to take control of your retirement savings.
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5 top pension resolutions for the New Year
You don’t have to be a finance whizz to get on top of your pension. Here are five easy ways that you can get everything in order to give yourself the best chance of a successful and happy retirement.
1. Check your workplace contributions
You may be paying into a private pension through your employer. As 2022 begins, it’s worth reviewing your current setup.
A key thing to look at is whether your employer has made any changes to how much they will contribute to your pension. Sometimes this can increase from time to time. So, it’s worth seeing whether you’re getting the maximum amount available to you, or whether you need to increase your contributions.
As 2022 gets underway, it’s also a good idea to see if you can afford to pay more into your pension pot. This may be because you’ve received a pay rise, or perhaps you’ve been following all of our personal finance advice here at The Motley Fool and you’re starting the year with more money!
2. Make sure you know where your pension is invested
Sadly, a lot of people don’t even understand that their pension is being invested.
However, knowing that your pension is invested is just the first step. The next step is to take a look at where your money is going and make sure that it matches your strategy and beliefs.
If you’re young, you may want to be aggressive with your asset allocation into equities (stocks and shares) to try and maximise your returns. Or maybe take a look into ethical investing using ESG funds or responsible investments. You may have more control over your pension than you realise, so make sure you explore your options.
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3. Research a SIPP
A SIPP (self-invested personal pension) is a great option if you are self-employed.
You might have become a freelancer or started your own business during the coronavirus pandemic. If so, it’s important that you create your own pension arrangements.
This comes with tax benefits and a younger retirement age than most private or state pensions. So it can even be a useful tool if you have maxed out your workplace pensions and are looking for efficient ways to invest.
These days, you can easily open up a SIPP on lots of different platforms, such as Hargreaves Lansdown or Interactive Investor.
4. Review how your pension fits into your overall finances
It’s really important to think of your pension as part of your overall financial pie and not as a separate bowl of custard sitting in another room.
As you get older, your circumstances will likely change. This could involve getting pets, having children or owning a business. But the point is that your retirement plans when you were 20 might look a little different when you’re 40.
So take a bit of time to look at where you are right now and where you think you might be in future. This can always change, but you need an idea of how much you’d need for a comfortable retirement. And this amount will fluctuate based on factors that will sometimes be outside your control.
5. Picture your dream retirement
Investing and saving for your pension doesn’t have to be a drag. Take a moment to daydream and think about what your perfect retirement would look like, or your ideal age to retire.
Being able to visualise how you would actually use your pension will make it easier to care about it today.
I know how tough it can be to save money for a future version of yourself who might not be grateful for your sacrifice. But I can assure you that not only will future you be grateful, but they’ll also be happy and enjoying themselves to the fullest because of all the hard work that you’re putting in right now!
