Six Tips for When You Are 5 Years Away From Retirement

Imagine waiting all year to see your favourite band perform live. You queue all day to get to the ticket booth and with front row tickets laid out in the kiosk in front of you, you reach inside your wallet to find out you don’t have enough money.

Of course you may think that would never happen. No one would reach that point before realising they don’t have enough money. It may not happen with tickets, but it does happen with pensions.

Some people reach their chosen retirement date and are shocked that their pension savings won’t provide them with the income that they need in order to stop working. They simply haven’t grasped the fact that their pension needs to be managed, reviewed and contribution levels adjusted over the years.

At Sanlam, we believe that financial planning is all about ensuring you reach each stage in life financially prepared. If you are five years away from retirement, then our top six tips may help you to ensure you pension income is in line with your expectations.

1. If you have had several jobs over the years then it is likely that you have a number of pension pots in a variety of places. Find the paperwork for each pension and take the time to go back through your career history to check that you are not missing any. This is particularly important if you have moved house and not updated your address with pension providers.

2. If you have pensions which are many years old, then they may have not been reviewed for some time if ever. Some old pension schemes will have a much higher charging structure than current plans, it may be that money is being invested into funds which don’t suit your attitude to risk or are invested poorly. It is a good idea to speak to a financial planner to get a good overview of just how and where your money is being invested and whether reducing charges at this stage will be beneficial.

3. Get a total pension fund value and a projected income of your combined pensions. If the projected income at retirement is much lower than you expected, then ask your financial planner to calculate how much more you need to start saving each month to reach your target and start saving now.

4. Consider merging pension pots. This may not be suitable for everyone due to charges or penalties which may apply on certain pension contracts, but if you have lots of small pension funds, it could be that your financial planner recommends merging these into one contract which will be easier for you to manage.

5. Check the beneficiaries of your pensions. When you started each pension, it is likely that you chose beneficiaries who would receive your pension money should you die. You may have got married and had children since then, so make sure this detail is up-to-date.

6. Take advice. If you do not feel confident about analysing your current pension arrangements or making decisions then speak to a financial planner. They will be happy to provide you with a pension review service and enable you to make informed decisions about your money based on your whole financial circumstances and in line with your attitude to risk.

The above article is for information purposes and should not be treated as advice. Individual circumstances should always be considered prior to purchasing any financial products. For further information contact Sanlam Private Wealth by e-mailing letstalk@sanlam.co.uk. Sanlam Private Wealth is a trading name of Sanlam Private Wealth UK Limited. Authorised and regulated by the Financial Conduct Authority.