Pension planning - some top tips

Whether you are looking to retire in three or 30 years, it's never too late to start planning. It sounds like a daunting task, especially with all the recent press over pension reform. The government is looking to make major changes to public pensions, while private companies are continually cutting back their pension benefits. So where does that leave you?

It's not just pensions that can contribute to a comfortable retirement. There are a number of things you can do in order to make sure you have enough income when you decide to retire.

The main theme is one you've heard many times before. Start saving - and now. A good starting point is to get into the habit of saving at least 6 per cent of your income for retirement.

That may be within a company pension, but if you don't have one, you need to squirrel that money away yourself. It takes quite a lot of discipline as we tend to spend what we have. However, you need to get into the habit, and fast. Don't rely on someone else. Be independent and know and understand what you have.

Caroline Anstee, director at Towergate Financial 4 women, provided us with these top tips:

Find out how much and when your state pension will be payable. Are you a carer? Find out what this means to your state pension. Do you have access to a company pension? If so, sign up because your employer is likely to match or add to your contributions. Start to think about when retirement might be, the earlier you plan the better. Start to plan how much income you might need in retirement e.g. where you might live, what lifestyle you would like. Look at your expenses now and consider how it might change in retirement. Consider what other assets will provide income in retirement. Do you own a second property or do you have investments? If you need to earn/save more to provide the lifestyle you need how are you going to do this? Don't rely on your business for your pension.

Remember to review this plan as your situation changes. Life events will have major consequences on retirement planning. Some to consider:

Divorce - Do you have a pension in your own right? If not, find out what you are entitled to by consulting a lawyer and/or financial advisor. Death of a partner or spouse - what benefits would you and/or the children get? Redundancy - how does this affect your pension with your employer? Most likely, your pension will be portable. New job - always consider the pension benefits on offer. They might be worth more than you think.

A lot of people put their heads in the sand when it comes to planning for retirement. But once you review all your options and put a plan in place, it's often a huge relief to know what needs to be done to live out your retirement years in comfort.

About Caroline Anstee
Caroline is a director of Towergate Financial 4 women and advises women on all aspects of financial planning. She believes that financial education and the ability to make informed decisions is key to financial independence.

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