Pension savers urged to take ‘small steps’ to boost retirement pot amid shortfall threat

Pensioner looking to return to work to pay soaring bills

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Saving towards retirement can be a major challenge for Britons to navigate, and putting aside enough is key. Individuals are likely to need more than the state pension to get them by, according to experts – and may be facing a substantial shortfall.

According to HSBC, this is racking up into thousands of pounds of missing income necessary for retirement.

The bank states its retirement calculator has shown a large gap between the nation’s retirement expectations, and actual savings.

British adults are now facing an average yearly shortfall of £11,238, as more than 61 percent users are not on target to meet their retirement goals.

It could mean retirement plans are significantly stunted, and individuals will not be able to enjoy later life in the way they hoped. 

Emma Chee, Head of Wealth Management Strategy at HSBC UK, said: “In the current climate, with the rising cost of living, we understand that not everyone will be in a position to save at the moment. 

“However, knowledge is power and it’s essential that people have a true picture of their current retirement savings and how this compares to their retirements plans. 

“For those able to set some money aside, there are small steps that can be taken in order to boost their retirement pot.

“This includes maximising pension contributions, considering whether they may want to invest, or adjusting their retirement plans to give themselves longer to save.”

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As Ms Chee highlights, those with a retirement savings shortfall may be able to take action.

Firstly, HSBC recommends the use of its calculator to check how much a person will need to save each year – although there are also other similar options online.

Next, people may want to aim to maximise their pension contributions as much as possible, freeing up more cash to put into their pot.

This can help individuals to make the most of tax relief and compound interest – two key tools helping people accelerate towards their goals.

In a similar sense, people are encouraged to save as much as they possibly can, which can be difficult but potentially achievable amid the cost of living crisis.

HSBC recommends making small changes to see whether Britons could save more, and searching for help if the cost of living crisis is proving difficult.

On top of saving, Britons may wish to consider investment although this comes with risk as people could get less back than they originally put in.

The bank also encourages individuals to make the most of joint allowances if they are married, in a civil partnership or have a stable relationship with shared assets.

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It could make more sense, HSBC states, to consider pensions and savings together in a joint strategy.

If these changes do not work, then individuals may wish to adjust or reevaluate their retirement plans.

Phased, gradual retirement may be necessary, or a person may need to continue their working lives to improve their financial security.

Pension decision making, however, should be carefully considered and some may wish to seek regulated, independent advice to help them. 

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