According to research from the Organisation of Economic Co-operation, the UK has the least generous state pension pot of all advanced economies.
This means two things. Firstly, it’s increasingly difficult for people to sustain themselves in their retirement, while the notion of safeguarding their children’s futures becoming increasingly fanciful with every passing year.
Secondly, those approaching retirement will need to take proactive steps to boosting the value of their private pensions if they’re to achieve financial security. Here are some ways to actively prepare for retirement in 2018.
1, Transfer Existing Pensions into One Pot
It’s quite possible that your private and workplace pension funds will be spread across multiple accounts, and this can make it difficult to manage your capital and optimise its long-term gains.
With this in mind, one of the best steps is to transfer these funds into a single pot, preferably one that offers access to a broad range of assets and potentially high returns.
Take the self-invested personal pensions (SIPPs) available through Bestinvest, for example, which are accessible to anyone who has £10,000 saved across their various pensions. This type of scheme can include both domestic and international asset classes, while ensuring that your capital can be managed from a single and easy-to-access platform.
2. Consider the Merits of Salary Sacrifice
If you’re in work, your employer may offer you the option of salary sacrifice as part of their pension scheme. While this does not work for everyone and you should consider the proposition carefully, it can help you to boost your pension payments and the final value of your fund.
In simple terms, salary sacrifice requires you to give up part of your salary, which in turn reduces the National Insurance Contributions (NICs) made by your employer. The company can then choose to invest some or all of their NIC saving into your pension, creating higher monthly contributions and a larger fund.
Like we say, you’ll need to consider your options before making a final decision, but this is definitely something that can boost your pension fund over a concerted period of time.
3. Choose Investments that will Benefit your Children
One of the benefits of opening an aforementioned SIPP is that you can have as much or as little control of your investments as you wish, and this enables you to explore assets that can help to safeguard the financial security of your kids.
There are also simple investment options that enable you to save towards your children’s futures, starting with basic savings accounts. These accounts tend to offer higher-than-average interest rates of 2% and upwards, meaning that even small monthly contributions can quickly accumulate over time.
Similarly, Junior ISAs are becoming increasingly popular in the modern age, as they provide a secure and relatively high-yield source of wealth that can develop into a viable nest-egg for your dependants.