We’d all like to retire in comfort. But many people in the UK are now facing the prospect of retiring on much less than they thought they would, thanks to cutbacks and restrictions being placed upon the type and nature of, and income which can be drawn from, people’s retirement funds.
The State of Pensions in the UK
Despite the government’s promise to address state pensions, making them fairer for women and easier to access and understand for all, it’s a fact that many people are still missing out on taking the full pension they are entitled to.
Not only are women, on average, living on £6500 less per year than their male counterparts, but a study performed by B&CE revealed that nearly half of the people they spoke to – both men and women – were unaware of their entitlement to tax relief on pensions.
What this means is that pensions discrepancies are being perpetuated under the current system, and these discrepancies are bolstered by a lack of adequate information , across the board, about fair entitlement.
Making the Most of Your Retirement Income
There are many ways to maximise your income in retirement, providing you know where to look and how to work the system to your advantage.
For example, a recent ruling has seen the cap on drawdowns overturned, which means that those who wish to opt out of annuities can increase their retirement income by as much as 20%. But drawdowns are more complicated than annuities and require careful and continuous assessment.
Annuities are still capable of providing a secure and reasonable retirement income, but with so many different types on offer, they can prove to be confusing.
Sensible Saving for the Future
No matter what type of retirement income you choose to depend upon for your pension, there’s only one foolproof way to ensure that you are able to live comfortably after you stop working.
The importance of saving cannot be underestimated, and the early one begins saving for retirement, the better. Often, maximising your savings by assembling a comprehensive investment portfolio is the best way to build up your retirement nest egg. This approach will mean you start saving into a pensions scheme later, but with a much larger initial contribution. Tax efficient savings are available in the form of ISAs and NSIs, which often match the tax relief offered on pension contributions and allow you much more control over how, and when, you will save for your comfortable retirement.