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Is now the right time to check your pension savings?

24/01/19

I’m writing this blog post at the end of January. Christmas is now a distant memory, my new healthy eating kick is fading away and we’re fully settled into 2019.

January is a busy month for us. Much like all of those new year health kicks, January is often a month when people decide that this is the year in which their finances will get sorted. They’ve been putting it off for far too long and it’s time to get a handle on things. This may be on your mind as well, but is now the right time to look ahead to retirement and see how you’re doing? Are you saving enough? Is your pension a good one? Can you retire when you would like to?

So is now the right time? Yes. The best time was probably 10 years ago, but the second best time is now.

The further you are from your intended retirement, the easier it will be to correct your course if you need to. If you project your current pensions and investments forward, based on your current savings rate and some cautious assumptions of how those pots may grow, you’re going to get one of three outcomes. Either you have more than enough, you’re just about right, or you’re coming up short.

You’ve got more than enough – great, you’ve been saving hard and it’s paid off. Now you’ve got options. Perhaps you could retire early? Have you always wanted to change careers to something less financially rewarding, but more personally rewarding? Or maybe it’s just time to treat yourself more often.

You’re just about right – good news. You can keep doing what you’re doing and sleep easier at night knowing that you’re on course.

You’re falling short – ok, we need to make some changes. There are various levers you can pull to change the outcome. The most significant are 1) save more, 2) take more risk with the investments, 3) retire later or 4) settle for less money in retirement. Your best friend here is time.

If you are a year from retirement, you only really have options 3 and 4 on the table. There just isn’t enough time left for the others.

If you are five years out, you can also make an impact with option 1 and saving more, but you’re probably going to have to make some serious budgeting changes to free up enough income.

If you’re more than 10 years away, you have the full suite of options available. Better still, with 120+ months left to make a difference, you may find that small changes now could make a big impact on your retirement.

If you’ve decided that now is the right time for you but you don’t know where to start, please feel free to contact us and find out if we’re the right team to help.


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