Posted on: 8th July 2015
It’s not until you find yourself withknocking at the door that you tend to give the intensive thought and consideration you should to your pot.
Of course, by this time, a great many ships have sailed in terms of savings potential. B
But even when retirement is just around the corner, there are still things you can do to give your pension a boost.
Roughly summed up, there are two options at your disposal – those being to either pay more money into your pension fund or to defer your pension for any given time period. Topping up your pension pot means either paying more into your pension or starting up an additional pension, while deferring your pension means holding back on your pension’s start date for a while longer. Of course some would argue that a third option is to put your money in high-growthopportunities in order to chase a quick and potentially lucrative boost, though most experts would argue that in this instance the risks generally outweigh the rewards.
The most obvious, common, and effective option is to increase the amount you pay into your pension fund in the years running up to its start date. This tends to be especially rewarding for higher-rate tax payers, for whom contributions are made particularly profitable.
For example, if you are a higher-rate tax payer and you add £80 to your pension fund, you get not only £20 in tax relief added to the sum but a further £20 in higher-rate tax relief. As such, each £100 technically only costs you £60. Of course there are limitations with regards to how much you can pay in over any given time, so it’s wise to speak to an independent financial adviser to find out where the upper-ceiling exists.
It’s also more than worth paying in a little more if you are in a lower-level tax bracket – contributions may be less spectacular but then soon add up.
Delaying Your Pension.
It sounds like a rather severe and less-than ideal option to some, but delaying the date from which your retirement income will start being used is an increasingly popular option up and down the UK. In this instance, the effect is a simple one – the longer you pay into your pension fund for, the more money there will be in the fund when the time comes to start using it.
What’s more, if you have any money that’s currently locked away in reliable investments, the longer you leave it untouched, the harder it works on your behalf.
Of course, the risk of the latter is that investments can go south at any time and this could put a sizeable dent in the positives of leaving your pension pot untouched. As such, it’s therefore advisable to speak to a trusted financial adviser for a little advice on your specific situation and options.
Regardless of how close you may be to retirement, there are always various ways and means to not only make your money go further, but make sure there’s a little more of the stuff to play with when the time comes.