Your common pension questions answered
It’s easy to worry about your pension – am I paying in enough?
Should I consolidate pensions from different providers?
Will I have enough money when I want to retire?
And while the answers are different for every individual, there are some questions to ask yourself which will help you feel more in control. Of course, we’d suggest you speak to a pensions expert, like Tudor’s Carl McHugh who has spent decades advising people on pensions and investments, and even trained financial advisors. Because it’s important any advice you get should be tailored to your individual circumstances. If you’re considering your pension situation, here’s what we suggest you think about.
Am I paying enough into my pension?
Will I have enough money when I want to retire?
It’s natural to think about these kinds of questions as we approach retirement age, but it’s even better if you can give them some attention in your 20s, 30s, and 40s as there’s more time to make changes. How much money you will need when you retire will depend on a number of factors, so ask yourself:
* What sort of lifestyle do I want when I no longer have to work? Do I want to travel to far flung places, or will I be happy with activities closer to home?
* Will I have a mortgage, or do I plan to pay it off before retiring?
* Will I want to downsize to release a chunk of cash which can go towards funding my lifestyle?
* What can I realistically afford to pay into a pension right now?
* How much longer do I plan to work and pay into a pension for?
The answers to these questions will guide you towards an understanding of how much money you might need to fund the lifestyle you’re seeking in retirement. But fundamentally, you have to be able to afford payments into your pension pot.
There’s no point anyone suggesting you pay in an extra £500 a month if you don’t have it available. In that circumstance, you’ll need to adjust your expectations of what you can afford to do when you retire, maybe doing some of the travelling while you’re still being paid a wage, rather than waiting until you no longer work. Should I consolidate private pensions from different providers?
There are lots of adverts on TV, radio and online from companies suggesting you need to consolidate your pensions into one place because it’s simpler to manage. But doing that isn’t the right answer for everyone. Whether you should combine a number of private pensions into one depends on a wide range of very personal factors including:
* How you want to take your money out of your pension – options include buying an annuity, also known as an income for life; cashing it in by taking the entire amount as a lump sum; and draw down, which allows you to take a lump sum and draw an income from the remainder for as long as it lasts
* Pension performance – pension fund investment decisions can make a huge difference to how pensions perform, so if you have a pension which consistently performs badly, it might be worth looking at you could get better returns in a different scheme. That said, as with all investments, previous performance isn’t an indicator of future performance, so it’s a personal judgement call about whether this is best If you have a deferred occupational pension which has been provided by an employer equally there are a range of important considerations which is worth a discussion with a financial advisor too. And as with all financial decisions, we’d urge you not to do anything until you’ve got personalised and professional advice from someone qualified to help.
Our regulated financial advisors can provide you with bespoke advice which is right for your circumstances to help you make the right decisions about your pension and any other investments. Call us to book a chat with one of our friendly team today.
The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.
Your personal circumstances will affect your choices about a pension. We recommend you get professional advice before making any investment decisions. This blog is not intended to be advice.
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