We all know we should review our insurance – every year when renewal time rolls around, we review our car, home, life, and other insurance policies to check they’re still right for us. Then we are assured for another year that we’ve got a good price and all the cover we need. But what about your pension?
Chances are, you don’t pay much attention to it. In fact, 3 in 5 people of working age in the UK have no idea how much they’ve got in their pension, according to a 2015 YouGov survey. This is a big problem – while it’s natural not to think about something that isn’t for twenty, thirty, or even forty years in the future, we need to be just as vigilant about our pensions as we are about our savings, investments, and insurance. Let’s take a closer look at why you need to review your pension regularly.
Why You Should Review Your Pension Regularly
1. You Need to Meet Your Goals
Some people love working and intend to do some kind of work for the rest of their lives if they can, and that’s fine, but if you want to retire when you’re 65, or earlier, you need to know how much money you need to have in your pension by then to live a comfortable lifestyle. If you save only the minimum for forty years and then start thinking about retirement when you only have a few years before your retirement date, you may have a nasty surprise.
2. We’re Living Longer
For many of us, the examples we see of retirement are of baby-boomer age, and most who had a good (or even okay) pension scheme back then have good pensions still today. However, the pensions our grandparents and great grandparents who have passed retired and had a life expectancy of around 75, meaning they had 10-15 years of retirement. However, it’s common today for people to live into their 80s and 90s thanks to medical advancements and improved knowledge about diet and exercise. For gen X, millennials, and younger, we will likely see the majority of people reaching 80. What does this mean? This means that if you retire at 65, you may live for another 30 years – and run out of money. If you’re not reviewing your pension and other investments frequently, you may find yourself in hardship in your later years.
3. Different Pensions Offer Different Rewards
Just like insurance, savings accounts, and other investments, not all pensions are the same. It’s important to remember that your pension is essentially a very secure investment account. So, while you’re not going to see aggressive growth, you want it to be managed by an organization that wants to make you money and not charge you large fees for the pleasure. If you’ve spent any time at all looking into investing, you’ll know that the associated fees can seriously harm your long-term outlook, and it’s just the same with your pension. You need to review it often to see how it’s doing, if it’s still right for you, and to check there aren’t any new fees that will throttle its growth.
4. You Should Be In Control
The company you work for shouldn’t have full control over the best pension scheme for you. Many large organisations will give you choices, but if you’re unfamiliar with the terminology, it can feel overwhelming and lead you to pick one that seems to make sense. If you don’t feel in control, or aren’t sure where your pension is, it’s a good idea to work with a pension adviser who can help you find the right place for your money and review again with you in the future. We recommend Evason Fildes as they give clear, straightforward, and unbiased advice.
5. If You’re Self Employed, You Need to Know You’re Making the Best Choice
If you’re a business owner, whether a freelancer or with a team of 100, you’re the one who’s in charge of your finances, and that means you should be ensuring you’ve got the right pension, too. Approximately 28% of self-employed people in the US don’t save for retirement at all, and the stats are likely similar here in the UK. The good news is that you have the most flexibility and, by working with an adviser and an accountant, you can set yourself up for success.
How Often Should I Review My Pension?
Your pension should be something that’s working away in the background, accruing interest for your later life. Just like your insurance products, it is your safety net. The best thing to do is to tie your pension review date each year to another date, like your life insurance renewal, and take a look at how it’s progressing or talk it over with an expert pension advisor once a year. In most cases, this will take less than an hour, and you can forget about it for another year. If not, it will take just a short time to start the process of moving it to somewhere it can get back to work for you.
If you’re looking for expert help, we recommend Evason Fildes. If you’re focused on setting yourself and your family up for success in the years to come, we’ve got plenty of advice on which insurance products are worth getting to protect you. To learn more, click here to learn about Income Protection Insurance, or, if you’re yet to purchase life insurance, you need to read 5 Reasons Why It’s Important to Have Life Insurance, Even If You’re Young.