Actively prepare for the third phase of your life

This may sound obvious but one of the main reasons why retirements do not deliver a secure and happy lifestyle is individuals do not look ahead enough and determine what they want and how it can all fit together.

The whole idea of looking forward to post-work years may sound a difficult prospect if you are at the beginning of your career. When so much in society, finances, needs and desires and the environment could change how can you possibly prepare appropriately?  How do you plan for something when you do not know what it will look like?

The point is, at whatever stage you are in life you need to have your retirement front of mind so when the need arises you can adapt to any changes in desires, financial requirements or social regulations as they happen.

Start early

In western society, an individual’s life can almost be broken down into three distinct stages. Childhood and education, building a family and earning money, and enjoyment in retirement. The first two we tend to plan for naturally but the latter sometimes tends to get a little lost in the mix.

When you start thinking about how you would like your retirement to be, you will naturally consider financial security. Also, by starting early, any investment will have a chance to grow and you will get into the mindset of checking on finances for the future regularly.

Understand how your pension income works.

As far as possible get a handle on how your pension contributions work and what your options are. Once you know how your retirement income can grow, you can plan in an informed way for your later life. The world of pensions has never been a popular topic and it remains pretty complex, so it is always useful to seek out the guidance of a regulated independent financial adviser. 

Check your pension performance

Your pension is no more than long term savings but they are also an investment which, dependant upon your level of risk and the performance of financial markets can rise or fall. Some investments will do better than others. If your lifestyle changes, your preferred risk may also change.  It is therefore important to keep an eye on the performance of your pension and adapt it (with the support of financial adviser) when needed. 

Your pension is perhaps more flexible than you may think

Recent advances in medicine, technology and science means that people are living longer and can look forward to an enjoyable active retirement. However, longer life means we have to work a little longer and make those retirement savings last a little longer.

The “Pension Freedoms” which was introduced in 2015, allows you to access your pension savings from the age of 55 (as long as you are in an eligible scheme), so offering flexibility to long term savings in later life. This is not right for everyone and could leave you worse off in retirement. You want to make sure accessing your savings early does not put your pension or retirement at risk – so seek out the support of a regulated financial adviser. 

Don’t forget your State Pension

Your State Pension may not offer the kind of income that a personal pension will give you, but it can offer the fundamental security. If we are absent from work, we will not be contributing to National Insurance (NI) payments which fund the State Pension.

Make sure you apply for benefits when away from work (to acquire NI credits), regularly check what your weekly State Pension payment will be and add contributions to bump it up to the maximum where you can.

If you're thinking about your pension, speak to a regulated adviser like Portafina or, view the guides at The Pension Advisory Service.