finance

‘Miserable middle’ left lagging behind in pensions – four key tips to help


Planning for retirement can be a difficult endeavour, but the issue has been compounded for a specific group. Commonly known as the ‘miserable middle’, these individuals have missed out on key pension benefits.

This group has missed out on a defined benefit (DB) pension and were not automatically enrolled in a workplace pension.

Defined benefit pensions dramatically disappeared when hundreds of UK companies decided to close their gold-plated retirement plans and moved to cheaper schemes.

Auto-enrolment was introduced by the UK Government in 2012, where employers became legally required to set up a workplace pension for their qualifying employees.

As a result of missing out on a DB pension and on years of employer contributions prior to auto-enrolment, some people may find they are lagging behind with their retirement savings.

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According to the Pensions and Lifetime Savings Association (PLSA), to achieve a comfortable standard of living, single people will need at least £37,300 a year.

Some Britons may feel powerless to change their retirement circumstances, but there are actions which could be taken.

Carla Morris, financial planner at RBC Brewin Dolphin, shared five top tips to help Britons improve their retirement prospects.

Stay engaged

Ms Morris stressed it is vital for individuals to review their statements regularly and keep track of their contributions, as well as investment returns.

She added: “When we get a new job or a pay rise, we naturally tend to grow into our pay packets, whether that’s buying a nicer car or upgrading our lifestyle. 

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“It’s important to keep up your contributions as you gain more income if you are able to.”

Consider a flexible retirement

Some individuals may not want to retire all at once, instead phasing out of work. This could involve working in some capacity, either part-time or on a freelance basis.

Ms Morris touched upon the benefits of such an option, stating: “This can help to supplement your retirement income and potentially improve your standard of living in retirement. 

“It can also help you stay active and engaged, which can be beneficial for your overall health and wellbeing.”

Speak to a professional

Of course, making decisions on one’s pension and retirement can have long-lasting implications, and so the matter needs to be considered carefully.

As a result, Ms Morris urges people to seek professional advice to work out one’s risk tolerance, current financial situation, and other important factors.

Britons should always be aware investment means capital is at risk, and they could get back less than they originally invested.





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