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We all know saving for retirement is important. But how much should members be aiming to save? Setting a goal can help to keep members on track for the retirement they want and set them up for success in later life. Here are four simple steps to help members get started.
1. Get a starting point
The first step is for members to check how much is in their pension pots. This will tell them where they’re starting from and how much they have saved already.
If they have several pension pots – which is pretty likely if they’ve had a few jobs – then they might want to consider bringing them together into one plan. This could make it easier for them to manage, as well as give them a clearer idea of what their future income could look like.
This won’t be right for everyone, though. Members could lose money by giving up any guarantees or benefits they might get from other pension plans, so it’s important that they check this first.
If your clients already have a Standard Life workplace pension plan, members can easily transfer their old pensions into their plan online. Our pension transfer hub has lots of resources that can help your clients support members who are considering bringing their pensions together.
2. Get an idea of how much retirement will cost
Next, it’s a good idea for members to work out how much they’ll need to pay for the lifestyle they want in retirement.
Standard Life workplace pension scheme members can use our Retirement Income Tool to find out. This uses data from the Retirement Living Standards to show if they’re on track for a minimum, moderate or comfortable lifestyle in retirement.
3. Decide what age to retire
The next step is for members to work out how many years they’ll need to fund, based on when they want to retire.
They’ll need to keep in mind the earliest they can access their pension, which is age 55 (57 from 6 April 2028). And with many people living longer these days, members may need at least a few decades’ worth of income.
The State Pension also won’t kick in until members reach their late 60s. So, if they plan to retire before State Pension age, they’ll need to be prepared to rely solely on their savings for a while.
4. Be realistic
At this stage, members will now have a figure to aim for. The next step is for them to work out how they’re going to reach it.
Although it’s good to be ambitious, it’s also important for them to be realistic and not set goals that are unachievable.
Members who still have a lot of years ahead of them to save for retirement are in a stronger position. They’ve got a long time to build up their pension savings, so even starting to regularly pay in a small amount now could make a big difference by the time they retire.
For others, retirement could be just around the corner. Members in this position might want to be a little more aggressive with the amount they pay in.
Our Money Mindset app, available to Standard Life workplace pension scheme members, includes a budget planner that can help members see how much they could put away for the future, based on what they’re spending today.
Time to set a goal
Members should now have all the information they need to start setting their goals.
Based on what they’ve planned, members might want to regularly review if they’re on track, and change their pension payments if needed.
Standard Life members can easily check and change their pension payments online or using our app. Plus, they can get access to tips and tools via Money Mindset to help them make more confident decisions about their money – and feel ready for the future.
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