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Money Hacks: Buy Your Future

03 March 2021

Top tips and pension pointers from EQ expert Chris Connelly, Propositions & Solutions Director.

Your Instagram-worthy later-life adventure isn’t going to pay for itself, so plan to sow a little pension seed now and reap the benefits when you reach a ripe-old age. Did you know that around a third of us plan to retire early, yet far less have any idea how we’re going to fund it?* Instead of keeping your fingers crossed and hoping things work out, take a look at our top tips and take control of your pension today.

Early Bird

The early bird catches the worm

Did you know?… If you start saving for a pension from auto-enrolment age and stop at 30, you could have a bigger fund than someone who starts at 30 and continues until they retire.* (*Contribution amounts being equal)

Minimum wage?

Even if you haven’t really thought about your future lifestyle, there are some good rules of thumb out there. PLSA guidelines show how much income you might need to pay you a wage in retirement.

Give Yourself A Pay Rise

Give yourself a pay rise

Check if your employer offers matching contributions (some employers will match what you pay in monthly up to an agreed percentage). You could effectively give yourself a pay rise this year without any awkward negotiations with your boss. {…and because pension contributions come out before you’re taxed, the government is chipping in too #winning)

No such thing as a free lunch

It’s worth having a look at where your pension is invested. If you have different options available, see how much they cost. Your pension pot is invested on your behalf by an investment manager, and that comes with a fee - but did you know that not all fees are the same? Some fees can be up to 2% a year more expensive than others and there’s no evidence that more expensive funds perform better than cheaper ones (and vice-versa).

A Goal Without A Plan Is Just A Wish

A goal without a plan is just a wish

We might have big ideas for our retirement lifestyle, but are we putting enough away to retire on comfortably? To check if your financial planning is on track, use the EQi pension calculator. You’ll see that even a modest increase to contributions can make a big difference over the long-term.

Pension power vs micro mortgage

People don’t always think of their pension as an investment, but it definitely is as contributions get invested on your behalf into various funds. There’s a debate over whether paying more into your pension could give a better long-term return on investment than making overpayments on your mortgage.

Pension contributions qualify for tax relief, which gives a big immediate boost to your savings (this could outweigh the interest saving on paying off a mortgage). Plus, up your contributions early and you’ve more chance of benefiting from compound interest. On the flip side the value of investments can go up as well as down so before making any decision, do your homework.​

Pots Of Gold

Find your pots of gold (No leprechauns needed)

It’s easy to lose track of pension pots from previous employers. The new Pensions Dashboard should provide the solution when it launches post 2023. In the meantime, if you want to find out where your former companies’ pension schemes are run, the Government has a free Pension Tracing Service.

 

Read more EQ Money Hacks: #InvestSmart

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