1. Can I defer my State pension?
You don't have to take your State Pension at your State Pension Age. You can put off taking it and this can increase the amount you will get when you do claim it. Under the new system your pension is currently increased by 1% for every 9 weeks that you put off claiming it
2. When can I retire?
The State Pension age is the earliest age you can claim your State Pension – warning – it’s been all change since 2010! The changes will see the State pension age rise to 65 for women between 2010 and 2018, and then to 66, 67 and 68 for both men and women. There are plans to increase this further to 70. This is because we’re all selfishly deciding to live longer and so the Government is struggling to keep up. The easiest way to find your state pension age is to enter your birth date into the government site, which will also let you know your bus pass age! #smallpleasures
3. What if I haven’t got enough years under my belt?
You may find that due to career breaks (particularly if you have raised children) you do not have sufficient qualifying years to achieve full State Pension and you may be able to make voluntary contributions to increase your entitlement. In other words, you pay the Government a bit more – and you get a higher State Pension in return. Before deciding whether to pay “voluntary NICs” – sounds like knickers but it stands for National Insurance Contributions - you should make sure that:
- There are gaps in your NI record for which payment can be made
- You know how much you need to pay
- You understand the benefits of paying
4. How much could I expect to have?
If you are 40 today, earning an average wage of £30,000, your workplace pensions savings could accumulate by about £2,400 a year. Add in investment growth and that could add up to a total sum of about £140,000 by the time you hit State Pension age. If you swap this in for a weekly figure, you’re looking at approximately £6,000 a year or £120 a week in your retirement*
5. How much do I need?
This is the big money question. Here’s another back of a fag packet... To get a rough feel for how much you might get every year from a chunk of pension cash, divide the chunk by 25. Got £140,000 saved up? You could get a pension firm to swap that for about £2,000 a year from retirement till you pop your clogs*. *This assumes you take out 25% of the £140,000 as tax-free income so you're trading in the remaining £105,000.
6. Can I opt out of autoenrollment?
In short, yes. Is it a good idea to do so, probably not. Of course one impact is that your monthly take-home pay will fall slightly (all other things being equal) as you see some of your earnings being siphoned off into this pension. But the benefit is that you get an additional 3% from your employer by 2019 – OK it’s disappearing into a pension and you won’t see any immediate benefits. But this is a bit like a pay rise which is being used to help save for your retirement. If you opt out, you won’t get this.
7. What if I am self employed?
If you are self-employed you fall through this net. You are really vulnerable when it comes to retirement savings. You need to take things into your own hands and set up a private pension. You could do this with a direct debit of £25 a month.
Or try allocating 5% of any paid invoice to a private pension when it hits your bank account? You will get tax relief and Government top-ups on this (without a paperwork drama). You can start with relatively small amounts and the hardest thing is getting started... Have a look at our private pensions Best Buys to see which private pensions we like. Under 40? Read up on Lifetime ISAs.