Why re-engaging with your pension now could help you secure your dream retirement

Published on April 19, 2023 by Andrew
A multi-generational family walking through the woods

According to a recent retirement survey, more than 24 million UK adults (46%) currently class themselves as “financially disengaged”.

While around 2.4 million people had previously taken an interest in their finances, they now admit to a change in behaviour, either because they:

  • Feel financially secure enough to be less diligent (20%)
  • Have seen other areas of their life become busier (18%). 

Worryingly, 17% of those who admitted to becoming disengaged couldn’t state a reason why.

There is some good news too, though. 

Sustained periods of financial uncertainty – like the current cost of living crisis – have historically seen the highest levels of re-engagement. And pre-retirees are most likely to be financially engaged.

Here’s why this is so important, and how speaking to financial professionals in the run-up to your retirement is key to securing your dream lifestyle.

If you haven’t already, you should ask yourself some key retirement questions in your 50s

The recent pension survey found that UK workers over age 55 are generally the most engaged (62% compared to a UK average of 54%). 

But there is still more work to be done.

Hopefully, you will have been thinking about and planning for your retirement for decades. Either way, your 50s are the time to ask yourself some key questions:

  • When do I want to retire and is this still realistic?
  • What are my plans and how much will they cost?
  • What provisions have I made and will there be a shortfall? 

Thinking about these questions as early as possible is the best way to become engaged with your finances. Picturing your dream future begins to make it tangible and thinking about potential shortfalls gives you years to make up the difference.

At The Pension Planner, we can connect the dots between your finances now and your future financial goals.

There are plenty of steps you can take now to smooth the way toward your dream retirement

There are several actions you should take now that form key parts of your retirement preparation.

Checking in with your pensions

Research shows that 34% of pre-retirees fail to check in with their workplace pension, while 28% are neglecting to review the personal pension plans they hold.

But checking in with your pensions is vital.

Reviewing your pension provisions helps to ensure your plans are still on track and gives you plenty of time to make changes if you need to. You might opt to top-up your pensions – especially in light of recent increases to the Annual Allowance – or speak to your employer about increasing your workplace pension contributions.

The Department for Work and Pensions (DWP) recently extended its deadline for topping up State Pension credits back to 2006. You have until July to ensure you receive your full entitlement so check in with it now.

Going into retirement debt-free means all your money can go into maintaining your desired lifestyle

Engaging with your finances well in advance of retirement means that you have plenty of time to tackle problem areas, such as any debt you hold.

Clearing high-interest debt is key but you might also want to review your mortgage to check for better deals or to consider the impact of paying off the debt early.

There can be pros and cons to this and your decision will depend on your circumstances and retirement plans.

Advice is crucial at retirement as the consequences of your decisions could be far-reaching  

Being financially engaged in your retirement will likely get easier as the big day approaches but the decisions you make about how and when you retire will affect you for the rest of your life. 

Locking yourself into an uncompetitive annuity or accidentally triggering the Money Purchase Annual Allowance could have huge ramifications.

Think carefully about some of the following questions and be sure to speak to your The Pension Planner adviser before you make any big decisions:

  • Does my dream retirement look the same now as it did when I began my pension savings? 
  • Is my retirement pot large enough to sustain my desired lifestyle?
  • Should I opt for a “cliff-edge” or would a phased retirement be financially and emotionally preferable?
  • Which retirement options best suit my plans and are they tax-efficient?
  • Do my plans cover unexpected obstacles like later-life care and have I thought about the money I might leave behind?

Managing your retirement income, especially if you opt for one of the more flexible pension options, can be difficult, especially during periods of economic uncertainty.

You need to remember that your outgoings will likely fluctuate throughout retirement and you’ll need to think about your longevity – how long do you expect your funds will need to last?

A long-term financial plan can help to protect you against the unexpected and include contingencies for the decades you spend out of work.

Get in touch

If you have become financially disengaged from your pensions lately, now is the time to snap back into action and check in with your plans. From revisiting your current provisions to thinking about your retirement options and how you’ll manage your income during your life out of work, The Pension Planner is on hand to help.

Whatever aspect of your long-term retirement plans you have questions about, get in touch. Email info@thepensionplanner.co.uk or call 0800 0787 182. 

Please note:

A pension is a long-term investment. The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Your pension income could also be affected by the interest rates at the time you take your benefits. 

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