Whether retirement is a long way off or rapidly approaching, having a set plan of how you're going to meet your financial goals is essential. You could need to secure an income for 20+ years so planning really is key, but unfortunately, far too few people realise its importance.
Research from Baring Asset Management highlights this lack of preparation. Their annual survey reveals that two-thirds (64%) of non-retired people have failed to review their pension plans over the last four years, while 61% also admitted to not reviewing their long-term savings and investments. Just 22% have reviewed their investments in the last 12 months, and a particularly worrying 43% have never reviewed their retirement plans at all.
This isn't an issue that automatically gets solved later in life, either. According to the figures, just 53% of 55-64 year-olds have reviewed their retirement plans in the last four years – despite the fact that those in this age group are rapidly approaching traditional retirement age.
Making the right choices as you head towards retirement is key to financial stability in your golden years. You need to make sure you've got a clear plan of how you're going to fund your decades of rest and relaxation, and ideally you'll be well on your way to building up a decent pension pot that can be put to great use throughout your retirement.
However, in order to ensure this, you'll need to be proactive in your pension saving choices. Investing into a pension comes with the same kinds of risks as any other investment, and it's important to maximise your contributions so they can work as hard as possible. Unfortunately just 18% of respondents aged 54-65 were "very" aware of the level of risk involved – which could lead to many losing out in the long run – while a further 41% opted for the default option when reviewing their pension plans.
This is perhaps unsurprising given that only half (49%) described the explanation given by their providers as either "very" or "fairly" good, while 21% said it wasn't explained at all. Pensions are very complex and can be difficult to understand, particularly when it comes to making the right investment choices, which is why getting suitable advice is so important.
Rod Aldridge, of Barings, commented: "Our research indicates that too many people are forgetting or ignoring their retirement plans, which is concerning. It is absolutely vital to fully understand the risk profile of your retirement funds, [otherwise] you could be inappropriately invested. This is particularly relevant for people leading up to the traditional retirement age."
So, just what can you do to ensure you're making the right choices? Well, not only should saving as much as possible be your first decision, but you also need to start thinking about how you're going to invest your pension savings wisely. Always seek suitable advice first, either by talking to your pension provider or consulting independent advisers, and if you're getting closer to retirement, make sure to review your plans!
Knowing how much you've got saved and what you can do with it is the first step to maximising your pension pot, and it'll put your mind at rest to know you've got a clear plan in mind. So, don't be one of the many who fail to review things – be proactive and you can be one step closer to enjoying a stress-free, and financially solvent, retirement.
Read some of our retirement guides
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