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What to do if you haven’t saved enough for retirement

If you’ve reached mid-life without thinking too much about your future finances, you’re not alone. Many of us could be described as ‘financial late bloomers’.

But there’s no need to panic. It’s never too late. The key thing is to act now so you can give your money more time to grow. Plus, you’ll feel better for taking some positive steps.

Here are some options for you to consider:

Get more from your existing pensions

Maximise your contributions


If you can free up more cash to go towards your retirement, now’s the time to increase your pension contributions. This way you can add as much as possible to your retirement savings and make the most of the tax relief from the government. As always, the longer you have your money invested, the more time and potential it has to grow.

If you have a workplace pension, does your employer offer to match any additional contributions that you make? If so, this is a wonderful benefit – try to take full advantage of it.

Consider moving savings or investments into your private pension


If you’re willing to lock away some of your savings or investments until you’re at least 55 (or 57 from 2028), paying them into your private pension could make a lot of sense.

Everyone who works can pay up to 100% of their earnings each year into pensions, which is capped at £40,000. You could carry forward any unused allowances for up to 3 tax years, so it’s possible to invest a significant amount and receive tax relief on all of your contributions. 

For example, if you were to move £20,000 from your savings into a private pension, the government would add £5,000, taking your pension total to £25,000. If you’re a higher-rate taxpayer, you could also reclaim up to an additional £5,000 in tax relief.

Keep in mind that when you retire, 25% of your pension fund is tax free and you’ll pay income tax on the rest. Tax benefits will depend on your circumstances and tax rules may change in the future.

Before making any large pension contributions, it’s a good idea to pay for some financial advice to make sure you’re doing the right thing.

Take stock of your existing workplace or private pensions


Check what funds your existing pensions are currently invested in, how they’re performing, what the charges are and if you’re able to make any changes.

You may want to consider changing the fund you’re invested in. Particularly if you still have many years left in your working life, the default fund may not always be the right fund for you.

For example, most workplace pensions automatically change their investment allocations the closer you get to retirement – but this may not align with your retirement goals. So take a look at your options.

If you have a private pension, you might want to shop around to find a provider with lower charges, a better track record, or one with more suitable investment options – like sustainable funds, for example. 

It may even be worth consolidating your pensions, although you should always check any exit fees and what, if any, benefits you’d lose if you were to transfer your pensions elsewhere. But be careful of scams as not everyone advertising ways to transfer your pension are what they make out to be. 

If you’ve had several jobs over the years, it’s also worth checking to see if you have any missing pensions by contacting the Pensions Tracing Service. They estimate there is £20 billion in lost pensions in the UK.

Check your State Pension and National Insurance contributions


Providing you’ve made at least 10 years’ worth of National Insurance contributions, you’ll be entitled to some level of State Pension from the government. For many, the State Pension is a lifeline. For others, it’s a great way to top-up their retirement income.

To find out how much you could get and if you can increase it, check your State Pension forecast.

If you have gaps in your contributions or credits – either from taking a career break, living abroad, being self-employed with low earnings or having a low income – these periods would not count towards your State Pension.

It’s worth checking your National Insurance record to see if you can make voluntary contributions to fill any gaps and, if so, how much this would cost to top up your State Pension.

Start saving more

It’s simple. The more you save now, the more you’ll have to retire on. Plus, the more time you’ll give that money to grow. So take a fresh look at your finances to see if you could be smarter with your money. Or think about whether you could generate any extra income for your retirement from a hobby or side job.

If you can put more aside, you might consider investing into a stocks & shares ISA on top of your pension. There’s still time for your money to grow and an investment could give you more flexibility than investing in a pension. To understand the differences and merits of each, see our article on pensions vs investments.

And if you’re fortunate enough to receive a windfall, investing could be a great option for that money. That way you can stash the cash for the future and give it the potential to grow more than it would in a savings account.

Just keep in mind that the value of your investments can go down as well as up, and there’s a chance you may not get back what you put in.

If you’re in a relationship, make the most of your joint allowances

It’s a sad fact that most women have smaller pensions than men and they tend to live longer so their pensions have to work even harder.

If you’re married, in a civil partnership or in a stable relationship with shared assets, it could make sense to look at both your pensions and savings together. Consider also the joint cost of living in retirement – as two can retire more cheaply than one.

financial adviser can show you how to make best use of your allowances to reduce the tax you pay when you’re both retired. They can help you make your money work harder in retirement by making sure you both have funds set aside in pensions and other investments. There’s a fee for financial advice but it could pay for itself in the long run.

Remember that, if you’re eligible, the Married Couple’s Allowance could save you money by reducing the income tax you pay or your partner pays. It works by transferring part of your personal allowance to a basic-rate-tax-paying spouse or civil partner.

Adjust your retirement plans

If you’re getting closer to retirement age and are concerned that you won’t have enough money, think about whether you can delay when you finish work. If that’s an option, let your pension provider know as it may make sense to change where your pension is invested.

More and more people are opting for reduced working hours and ‘semi-retirement’. It can be a way to keep working longer and have more financial security, while also achieving a better work-life balance.

Semi-retirement is a way to keep you physically and mentally active while also enjoying the all-important social aspect that work can bring. For many, it can be a happy medium that helps them to work less and live more.

Key takeaway

However far you feel from retirement, there are always things you can do to shore up your finances for the future. It all starts with taking a clear look at your current position to see what positive changes you can make today.