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Behind on your retirement plans? – 3 ways to make up for lost time

With over a fifth of retirees wishing they got to grips with retirement sooner, here are three ways to make up for lost time.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

This article is more than 6 months old

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

Over one in five of retirees’ biggest regret was they wished they got to grips with saving for retirement sooner*.

The best way to build a good level of retirement savings is to ideally start early, contribute regularly and, save extra where you can.

But not everyone, particularly those who started their career before auto-enrolment, has been able to do this. As a result, their pensions can be lagging behind. But it’s never too late to make a difference.

If you’re worried about the size of your pension pots, here are three ways to make up for lost time and develop a sustainable retirement plan.

This isn’t personal advice. If you’re not sure what’s right for you, ask for financial advice. If you choose to invest, the value of your investments will rise and fall, so you could get back less than you put in.

*Research of 2,000 people carried out by Opinium on behalf of HL in May 2023.

1. Make the most of your employer’s contribution.

The simplest way to grow your pension pot and make up for lost time is to increase how much you put into an existing workplace pension scheme if you haven’t already.

Over half of people believe the minimum automatic enrolment rate is enough. But, industry reports suggest the UK's savings gap could reach £350 billion by 2050. That means, as a nation, many of us aren’t saving enough for the future.

It's worth checking if your employer offers what’s known as employer matching. That’s where if you increase how much you pay in, they pay in more too.

Say you’re 45, earning £34,000 a year. Your pension’s worth £60,000 and you increase your contribution from 5% to 6%. Now if your employer boosted theirs from 3% to 4%, your pension could grow by 11% from £162,000 to £180,000 by age 68.

Another 1% increase from you and your employer could result in a pension of more than £200,000 – nearly a 25% increase on what you would’ve had.

We’ve assumed that you work continuously until you’re 68, with wage inflation of 3% a year, investment growth of 5%, and charges of 1.5%.

These figures are just an illustration. The value of your pension and the income available when you retire are likely to be different. It will also depend on several factors, including your investment performance and the retirement options you choose.

Try our pension calculator

If you’re already contributing the maximum to your workplace scheme, you could consider paying into a private pension like the HL Self-Invested Personal Pension (SIPP).

Generally, the most you can pay into your pension each tax year, and benefit from the tax relief, is as much as you earn, up to the annual pension allowance – this is currently £60,000 for most people.

An HL SIPP is for people who want to take control of their retirement savings. You can invest exactly where you want and control how much money goes in and when.

Remember though, you can’t usually access money in a pension until you’re 55 (rising to 57 in 2028). Pension and tax rules can change and any benefits will depend on personal circumstances.


2. Check if you’re on track for retirement.

Only one in five are confident they’re saving enough.

So, if you’ve left retirement planning too late, chances are you’ve not checked in on your pension to see if you’re on track for your dream retirement.

The Pensions and Lifetime Savings Association has proposed three living standards – minimum, moderate and comfortable.

For a single person to reach a ‘minimum’ standard of living, they would need a yearly income of about £13,000 a year. A couple would need about £20,000.

This amount would allow for some social occasions, but means you wouldn’t be able to afford a holiday abroad or the cost of running a car.

To reach a ‘moderate’ lifestyle, a single person would need an annual income of £23,300 and a couple would need £34,000.

This would allow you to spend more money on any nice-to-haves. You could be able to afford a two-week holiday in Europe every year and run a car.

At the ‘comfortable’ living standard (£37,300 a year for a single person and £54,500 for a couple), you’d be able to enjoy more financial freedom and some luxuries.

This includes taking an extended trip abroad, running a newer car that can be replaced more regularly, and spending more on weekly food shops and personal items like clothing.

As well as taking stock of your other cash savings and investments, you could contact your pension provider(s) and check how much your pensions are worth. If you have any old pensions, it’s worth tracking them down too.

In fact, under a third of people we asked strongly agree that they know where all their pensions are. Make sure you don’t miss out on your dream retirement because of lost or forgotten pension(s).

Track down an old pension

Now using our pension calculator, find out what your pension could pay each year. You can start with your State Pension age for now – for most of us this is likely to be around 67 or 68 at the moment. This should give you an idea of what your pensions could be worth and what you should be aiming for.

Still not on track?

You could consider increasing your pension contributions or delaying your retirement.


3. Review your investments

Don’t forget to review your investments periodically.

Most workplace pensions will offer a default fund. This is a type of investment chosen for you if you don’t want to make your own investment choices.

If you choose your own investments, or even if a fund is chosen for you, you should still keep tabs on its performance. You can ask your pension company for a fund factsheet, where you’ll be able to see how it’s doing.

If you’re far from retirement and happy to accept more risk for the potential of more growth this is an option you could consider putting aside at least a portion of your investments into higher-risk investments could see your money going further.

Remember all investments can go down as well as up in value, so you could get back less than you invest. If you’re not sure if an investment is right for you, ask for financial advice.

If you’re investing in the HL SIPP, you can choose from over 3,000 funds, UK and overseas shares, investment trusts and more to match your personal values, financial goals and attitude to risk.


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    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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