Retirement tends to be longer as life expectancy increases, and people plan decades of life after work. This creates a problem for those who are behind in saving, a problem often perceived by women.
In fact, findings from the Center of Economics and Business Research (CEBR) showed a gap of more than £180,000 between the pension savings of men and women over the age of 55 on average.
Express.co.uk spoke to Shona Lowe, financial planning expert at abrdn, who explained steps can be taken to close the gender pension gap for women, but the same goes for anyone concerned about their retirement income. can be applied effectively.
Perhaps one of the most important tasks, according to Ms. Lowe, is the pre-planning of the state pension.
While people can easily take the state pension for granted and put it on the back burner, it’s important to understand how it works.
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“This applies if you have taken time off from work in the last six years, for example to look after children or an elderly relative.
“The cost of this is effectively subsidized by the government, which means it can offer excellent value for money.”
The second tactic offered by Ms Lowe is to encourage retirement saving, as its “power” should not be underestimated.
Individuals may consider increasing their contributions as the returns on these savings are likely to be better than any other vehicle due to the favorable tax treatment of annuities.
For that reason, Ms Lowe said the sooner a person can increase their pension and the larger the contribution increase, the better.
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She continued: “Possibly it’s not just your extra money that can help build your pension – by increasing your contributions, you can also increase your employer’s contributions.
“You also get tax breaks on your contributions, so a small increase in your contributions can make a bigger difference than you think.
“Even if your income falls, it pays to continue paying your pension contributions if you can afford it. Otherwise, your employer contributions will also be reduced or stopped altogether. Might as well be.”
Next, Brits should always check their liquidity because saving and planning ahead is important.
While annuities are a form of income in retirement, it can also be worth exploring alternative options to pursue later life goals.
In addition to the statutory pension, this can also include company pensions, savings tools, investments and other sources of income such as rented property.
However, Britons should always be aware that investing involves risk and you may end up getting less than what you originally invested.
Finally, Ms Lowe urged people to use her personal savings account (ISA) because it offers tax-free benefits for growth or interest.
She explained: “You can save up to £20,000 every year which can really add up over time.
“There are cash ISAs and stock and stock ISAs that you should consider, but if you decide to invest in stocks and stocks, keep these in mind as the value of your investment will fluctuate with the stock market.”
Ms Lowe said it’s understandable to feel intimidated by the prospect of retirement, but considering these points could go a long way to helping.
Brits are also encouraged to seek financial advice if needed, as experts can often help create a bespoke plan.