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I feel totally unprepared, and need help knowing where to start

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Planning for retirement is a bit like going to the gym. Everyone knows it’s a good idea; but in practice, actually finding the time and motivation to do it can prove tricky
 
Planning for retirement is a bit like going to the gym. Everyone knows it’s a good idea; but in practice, actually finding the time and motivation to do it can prove tricky. And besides, surely it’s going to cost money?
 
If you are in a position of feeling anxious that you’ve neglected your retirement planning, stay calm, and let’s treat this as your first step towards doing something about it. Of course, the more time you have until you retire, the greater ability you have to shape your financial plans. But even if retirement is approaching very quickly on your horizon, there are still several things that you can do to boost your retirement income.
 
 

Here are the top five things you need to consider as a priority

 

1. Pencil in a rough date for when you want to retire

 
Traditionally, 65 is viewed as the age that you retire, but due to recent legislation that no longer has to be the case and you may wish to continue working past your 65th birthday. Alternatively, you might prefer to retire before you reach 65.
 
It’s not about setting something in stone now, but you do need to have a retirement timetable in mind so you can plan accordingly. If you are 10 years away from retiring, there will be more things you can do now to prepare than if you are five years away – so your starting point needs to be defining a rough date for stopping work.
 

2. Take your head out of the sand, and have a look at your private pension arrangements

 
As part of employed life you will have arranged to make regular payments into a pension. If you have changed jobs, you may even have a number of different pension pots. 
 
It’s easy to fall into the trap of not paying much attention to your pension, assuming those regular payments are taking care of themselves – but the reality is you might not be paying enough in, or this pot of money might be invested into poor-performing funds.
 
So if you don’t know the value of your pension, take a deep breath and find out. Your pension provider should send you an annual statement, or you might be able to obtain one online. The reality is that you are probably going to be largely dependent on this pot of money for the duration of your retirement – it’s effectively going to replace your salary – so don’t neglect it and hope for the best.  
 

3. Consider paying more into your private pension (or setting up an additional pension) are

 
There are significant tax relief advantages to paying into a pension compared to, for example, saving up for retirement through a savings account. If you’re a higher rate taxpayer, for example, every £60 you pay in will see £100 go into your pension pot. And if your employer matches your pension contributions by paying into it also, you are effectively receiving free money towards pension and future retirement income.
 
And when you come to retire, from April 2015, the rules around accessing your pension fund are changing considerably – providing you with much greater flexibility over how you use this pot of money.
 
If you can afford to pay more into a pension now, you should strongly consider doing so. 
 

4. Find out if you are going to receive the full basic State pension

 
The basic State pension can play a prominent role in your retirement income. From April 2016, the maximum you can receive is expected to be £148.50 a week – which adds up to just short of £8,000 per year.
 
If you can afford to pay more into a pension now, you should strongly consider doing so 
 
However, to qualify for the full basic State pension you will need to have completed at least 35 years worth of National Insurance contributions. If you have significant gaps in your employment history, you might fall short of this criteria. To find out where you stand, apply for a National Insurance statement from the HMRC website.
 
If you are short, you might be able to make voluntary payments now to top up your qualifying years. Visit www.gov.uk.
 

Review your savings and investments

 
Beyond your pension and State pension, you might need to rely on your savings and investments to provide you with an income in retirement, or for fulfilling any one-off aspirations you have. If you have not reviewed your finances for some time, take steps to do so now by considering financial advice. 
 
So much has happened to the world of personal finance over recent years, meaning you may need to find out if your savings and investments are affected. 

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