Pensions expert shares five steps to avoid retirement regret in later life
The Pensions Act 2014 set out the timescale for the increase in State Pension age from 66 to 67 years old and will first affect those born between April 6, 1960 and March 5, 1961. Anyone born between these dates can use a handy tool on GOV.UK to find out the earliest point at which they'll be eligible for their State Pension.
A further State Pension age increase from 67 to 68 is set to be implemented between 2044 and 2046.
People born on April 6, 1960 will reach State Pension age of 66 on May 6, 2026 while those born on March 5, 1961 will reach State Pension age of 67 on February 5, 2028.
Everyone affected by changes to their State Pension age will receive a letter from the DWP well in advance, however, you can check your own State Pension age online here. It's important to be aware of these upcoming changes now, especially if you have a retirement plan in place.
New research from Opinium on behalf of Hargreaves Lansdown found that one in five people aged over 55 said they regretted not starting their retirement planning early enough.
A further 15 per cent said they wished they had contributed more while 15 per cent said they regretted assuming they would have enough saved for later life.
Some 4 per cent said they wished they had made more of their employer contribution. However, well over half (57%) of over 55s said they had no retirement planning regrets.
Commenting on the findings, Helen Morrissey, head of retirement analysis, Hargreaves Lansdown, said: 'It can be easy to succumb to 'set and forget' when it comes to your pension, but this leaves you open to retirement regret later on. Getting to grips with your pension earlier in your career can save you a lot of bother.
'This was the main source of retirement regret, with one in five people aged over 55 saying they wished they got started on their pension planning earlier. Not contributing enough was a bugbear for around 15 per cent, while the same proportion said they had made an error in assuming they would have enough by the time they retired.
'The bright spot of the research was that well over half (57%) of those asked said they didn't have any retirement regrets. This could be because they have a good defined benefit pension, or it could be because they've checked in on how their pensions are doing periodically and made adjustments, as necessary.'
Five steps to avoid retirement regret
To help people make the most of their time now to ensure a smooth retirement, Ms Morrissey shared five simple steps to follow.
Keep an eye on how your pension is doing
Don't 'set and forget' your pension contributions. It's important to check in on your pensions from time to time. Use a pension calculator to see what you are on track to receive – if it's enough then great, but if not, you've got time to do something about it.
Boost your contributions
Auto-enrolment sets minimum contributions but these on their own may not be enough to give you the retirement you need. Taking small steps such as boosting your contributions every time you get a pay rise or new job can be a relatively painless way of increasing contributions before you get used to spending the money.
Can your employer do more?
Many employers will keep their contributions at auto-enrolment minimums but there are employers who are willing to do more if you increase your contributions. This is known as an employer match and can really ratchet up the amount of money going in over time.
Find those lost pensions
If you've had several jobs, then the likelihood is you have lost track of a pension somewhere along the way. This means there could be a pot worth thousands of pounds out there that could make a huge difference to your retirement planning. If you think you've lost track of a pension, then give the government's pension tracing service a call.
All you need is the company name or that of the provider. The service can't tell you if you have a pension with them, but they can give you contact details. Find out more here.
Consolidation might work
Once you've tracked down your pensions, it might make sense to consolidate. Having an overarching view of what you have can be a gamechanger for your planning. You may realise you have more than you thought, and this can transform your retirement planning.
For instance, you may be tempted to take small pensions as cash and spend them but by consolidating them you are less likely to do this. However, make sure you aren't incurring any unnecessary costs in consolidating such as early exit penalties.
It's also worth checking that you aren't missing out on valuable benefits such as guaranteed annuity rates. It also rarely makes sense to transfer out of a defined benefit pension due to the guaranteed income on offer.
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