Pension planning is often an endeavour undertaken years in advance, as Britons look towards the horizon of retirement. An understanding of pension income can be a make or break for a comfortable retirement. Indeed, having ample savings put away for later life can help Britons with day-to-day costs as well as reaching later life goals.
This could leave them facing higher premiums as they scramble to make arrangements later down the line.
Neal Cross, life insurance expert at MoneySupermarket, commented on the matter.
He said: “It’s interesting to see the number of people enquiring about life insurance across different age groups that are yet to prepare their financial futures.
“The importance of life insurance, pensions and wills are often overlooked.
“This could explain the disparity between the recommended pension pot of £262,500 and how much people believe they’d need to get by.
“It’s recommended to start making your monthly contributions towards your pension as early on as possible making sure your next of kin are covered in the event you pass away.”
For those planning their retirement income, there are a number of steps to take into consideration.
Firstly, Britons should assess what arrangements they currently have in place.
Due to auto-enrolment rules, millions more are now entitled to a workplace pension which will leave people with at least some savings as long as they remain opted in.
However, many may wish to explore the option of private pension savings, and are encouraged to do so as soon as possible.
This is because the sooner an arrangement is made, the more time a pension income has to build up and increase.
Britons may also wish to consider the state pension as a source of income for their retirement.
While the sum is derived from the contributions of people in National Insurance throughout one’s lifetime, it is increasingly viewed as a safety net.
However, despite a diminished importance, it is still key to understand one’s state pension entitlement.
This can be achieved through the government’s state pension forecast tool, which provides insight into when a person is set to reach state pension age, and how much they could receive.
Britons can then be proactive in making moves to rectify any potential gaps which may be found in a National Insurance record.