3 Nov 2022
During the pandemic with many job and income losses, it’s important you dont dip into your pension savings without any thought to your future.
Sadly the recent pandemic saw many job and income losses. It’s important for those eligible, that you don’t fall into the trap of accessing your pension savings early with no thought for the future.
Saving into a pension can be vital if you want to enjoy a comfortable retirement - but watch out for any pension pitfalls that could catch you out!
Misunderstanding the cost of living in retirement
It’s important when saving for retirement not to underestimate how much you need to set aside, otherwise you could be left with a significant shortfall once you stop working.
Everyone’s circumstances, needs and desires in retirement are different and it may be that you need more money than you think.
Underestimating the length of your retirement
The pension freedoms have given people the opportunity to take money from pension pots early, often before planned retirement ages. This could potentially be storing up trouble for the future, especially if people are underestimating how long these pensions need to last.
Relying on your home as your pension
Property can be a reasonable long-term investment, but you shouldn’t put all your money into your home at the expense of your pension. Pensions can have many advantages over property, including tax relief and employer contributions (in the case of most workplace pensions).
Not reviewing your pensions
Many people think that just having a pension means they will be financially prepared for retirement, but they don’t always understand that it’s necessary to review these plans on a regular basis in order to get the most out of your returns.
If you find you have a shortfall, you may still be able to take steps to increase the chances that your pension pot will be able to achieve the income you want when you retire.
A pension review with a financial adviser could be a wise move, it may give you the chance to go over everything to see if you are heading where you want to.
Not assessing all your retirement options
It’s important that you spend time assessing all your options and get good advice, it could be a wise move to seek professional financial advice.
Thinking you have to stop work completely
Phased retirement can offer many advantages and not just financial. Winding down into retirement can give you time to build up new hobbies helping to enable a smooth transition into full retirement.
Falling victim to a scam
For most people in the UK, their pension savings can be one of their largest financial assets, saving towards their retirement over the course of their working lives.
Unfortunately, because of the size of individual pension pots, pension savings can be an attractive target for criminals.
It’s always best to check who you are dealing with and be on your guard if you’re approached about your pension.
The value of pensions and investments and the income they produce can fall as well as rise.