Pension planning is far from simple. Making sure you’ve got enough saved for a comfortable retirement while getting the best return on your investments while avoiding tax pitfalls can be a minefield.
Navigating the world of pension planning can be a minefield. Making sure you’re investing your money in a way that will make sure you have as comfortable a retirement as possible is far from simple.
Now, consumer advice organisation Which? has said you could boost your pension pot by a massive £37,000 by putting in just an extra £39 a month. In a video on TikTok, the organisation provided some handy advice, and outlined five common mistakes which could hurt you in the long run.
In the video description the organisation said: “Did you know an extra £39 per month could boost your pension pot by £37,000? We look at the biggest mistakes you could be making when it comes to retirement saving – from putting off planning completely, to cutting your contributions, to losing track of old pots when you change jobs.
“It might be tempting to cut or stop payments if money gets tight, but this could end up costing you in the long run. It’s even better if you can make extra contributions from time to time – for example, if you get a bonus. This can make a significant difference over the long term.”
The five mistakes to avoid in pension planning
The organisation continued: “Retirement planning is a crucial aspect of ensuring financial security in your later years. Many individuals make mistakes that can severely hinder their ability to save effectively for retirement.
“One of the most staggering findings reveals that even an extra £39 per month could boost your pension pot by an astonishing £37,000 over time. Understanding the pitfalls in retirement saving is essential to secure your financial future.”
Which? outlined the five biggest mistakes which could hurt your financial future.
- Delaying retirement planning: “Procrastination can cost you dearly,” Which? said. “Starting your retirement plan as early as possible allows you to take full advantage of compound interest over the years.”
- Cutting or stopping contributions: “In times of financial strain, it might seem sensible to halt or reduce pension contributions,” it added. “However, this can result in long-term losses that outweigh short-term relief. Make it a priority to maintain or even increase your contributions whenever you can, especially if you receive bonuses.”
- Losing track of old pension pots: “Changing jobs frequently can lead to lost pension pots,” it continued. “Keeping track of all your pensions ensures that you are not missing out on significant savings potential.”
- Not taking full advantage of employer contributions: Which? added: “Failing to contribute enough to receive full employer matching contributions is like leaving free money on the table. Be sure to maximize your contributions to take full advantage of what your employer offers.”
- Ignoring the impact of inflation: “Over time, inflation can erode the purchasing power of your savings,” it said. “It’s essential to consider inflation when planning for retirement, ensuring your savings will be enough to maintain your desired lifestyle.”
The organisation concluded: “By avoiding these common mistakes and actively managing your retirement savings, you can significantly enhance your pension pot and ensure a comfortable financial future. Establishing a clear retirement strategy and adjusting your contributions as your financial situation improves can make a noticeable difference in the long run.”
People added their own tips in the video’s comments. One said: “I’d recommend balancing your pension (especially if your employer contributes) with a stocks and shares ISA. Best of both.”
Another wrote: “Some companies allow you to pay your bonus into your pension, which is a great perk!”
How to find your ‘lost’ pensions
It’s estimated that an incredible £31.1 billion is sitting in forgotten or unclaimed pensions pots around the UK, with an average of around £9,500 per pot. The UK Government has a dedicated online portal to help you track down any money you’ve lost the details of, or forgotten about.
All you need is your name, the details of your previous employers, and your National Insurance Number. Once these details are entered into the Pensions Tracing Service, a specialist will get in touch to let you know what they’ve found. You can then get in touch with the pension providers directly to determine how you can get hold of your cash.
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