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Pension and state pension income can be boosted by taking action - 'never too early!'

Daily Express logo Daily Express 27/11/2021 Rebekah Evans
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Retirement can often be expensive, and individuals will need to have a certain amount of money put aside to see them through later life. However, people do not have to be complacent or resigned about their financial situation. Instead, they can take steps to boost their pension, state pension and retirement income as a whole.

Express.co.uk spoke exclusively to Karen Barrett, founder and CEO of Unbiased.co.uk who provided further insight into the matter.

She said: "It's never too early to start thinking about your retirement because there is no one-size-fits-all solution.

"Your private pension income will depend on the size of your pension pot and what you're willing to do with the funds in it."

According to Ms Barrett, there are a number of ways people can boost not only their pension, but also their income for later life.

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pension state pension © Getty pension state pension

This is likely to be important as the cost of living rises, alongside life expectancy meaning people spend longer in retirement than ever before.

First, looking at one's pension arrangements and how these are working is likely to be essential.

Ms Barrett said: "Consolidating different pension pots could enable you to say goodbye to any under-performing pensions.

"This will affect how big a pension income you eventually receive."

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However, another vital consideration to take into account is not only how private pensions are managed, but also how income can be taken from these arrangements.

Ms Barrett explained: "You can withdraw up to 25 percent of your pension tax-free, and the rest will be taxed as normal income.

"Broadly speaking, you can achieve higher income in the shorter term from drawdown, but this is less reliable than an annuity, which is guaranteed for life.

"With drawdown, you can eventually run out of money if you take out too much, and/or if the stock market performs badly.

pension saving UK 2021 © EXPRESS pension saving UK 2021

"The annuity will never run out - the snag is that the annual income may not be as high as you'd like.

"Some retirees find that a mixture works well for them: an annuity for reliability, and a drawdown fund for flexibility."

However, Ms Barrett also stated the state pension could hold the important key to boosting retirement income.

She recommended the idea of potentially deferring one's state pension - a concept which could mean individuals receive more when they eventually claim the sum from the Government.

The state pension increases every week a person defers, as long as this is for at least nine weeks, and will be paid with a person's regular state pension payment.

The sum rises by the equivalent of one percent for every nine weeks deferred, meaning this works out as just under 5.8 percent for every 52 weeks, showing it can be potentially effective.

Britons do not have to turn to their pension arrangements in order to boost their retirement income, however.

Alongside these considerations, Ms Barrett pointed towards other ways individuals can ensure they are financially protected in later life.

She concluded: "Finally, consider other ways to boost your retirement income. This could include equity release, downsizing or working part-time.

"Getting the right advice for your retirement is crucial, whether you are five or twenty five years away from retiring."

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