The UK state pension age is currently 66 for both men and women and this is potentially rising to 68 under the Pensions Act 2007 between 2044 and 2046.
For personal and workplace pensions, you can usually take money from your pension pot after you’re 55.
From a statutory point of view, retirement can commence from age 55. Depending on how you obtain your income and the plan you have in place, retirement could begin at an earlier age.
As you plan for and approach retirement, there are a few things to consider to boost your retirement income:
Check your State Pension entitlement and forecast
The State Pension is a regular payment from the government most people can claim when they reach State Pension age. How much you get depends on your National Insurance record. You will need between 10 to 35 qualifying years on your National Insurance record to get any State Pension.
You will have qualifying year if:
- you are employed and earning above the lower earnings limit (£123 per week or £533 per month)
- you are self-employed and paying Class 2 National Insurance contributions (£3.45 a week)
- you make voluntary National Insurance contributions (£17.45 a week)
- you receive National Insurance credits
You can get a State Pension forecast online from the Check your State Pension service. This provides personalised information, including your State Pension age, an estimate of how much State Pension you may get at that point and if you can increase this amount. It also allows you to view your National Insurance contribution history. Visit www.gov.uk/check-state-pension for more information.
Workplace Pension
If you have had several jobs, it is possible that you may have several pension pots. If you do not have the information on this, you may use the pension tracking service to find details of the pension administrator. View the tracking service via https://www.gov.uk/find-pension-contact-details
By law, all employers must provide workplace pensions for employees. If you are employed and not in a pension scheme, check with your employer how you can be enrolled into their pension scheme.
Most pension schemes set an age when you can take your pension, usually between 60 and 65.
Personal Pension
You may set up a personal / private pension in addition to the workplace pension and State Pension. This increases the amount of income you will be eligible for in retirement.
If you run your own business, you may benefit more from setting up a Self-invested personal pension (SIPP) or small self-administered scheme (SSAS) for your business. Depending on your choice, you may need to consult with an Independent Financial Adviser (IFA).
Part Time Work (in retirement)
To increase your retirement income, you may consider doing some part time work. You can continue to work much after your retirement age.
When you retire, you leave work and stop working. A part time job may therefore not be ideal for most individuals.
Savings and Investments
If you have investments and savings you have built up over time, the interest or income earned from your investments and savings will boost the level of your retirement income. The return on investments will vary depending on interest rate and performance of your portfolio.
It is never late to start building up savings and investment pot. Savings may include cash ISAs and fixed deposit accounts. Investments may include purchase of stocks, shares. crypto assets and pension ISAs. The options are not limited to these and having a conversation with an IFA could be beneficial.
Property Income
Having rental income can be a great boost to the level of your retirement income. If you have property, selling the property to raise money can supplement your retirement income. If you have a large home, renting out a room can add additional income to your retirement pot.
There are several avenues to generating income from property and if you do not already have property income, it may be beneficial to consult with individuals who are already in this space.
Start or buy a business
Being retired does not mean you cannot start a business, buy or invest in an existing business.
If you have a hobby or are passionate about something, this could be a side business that can supplement your retirement income.
Plan your retirement
Having considered various options of boosting your retirement income, you need to put a plan in place.
Once you decide when you want to retire, you should take steps to ensure that you are maximizing all option available to you to increase and supplement your retirement income.
If you would like to discuss issues arising from this article or to find out more on the applicable tax strategies, please contact Tobi Lab via email at hello@thetacuk.com.