Four Ways To Boost Your Retirement Savings

When I first started working, thinking about retirement was so alien that I didn’t want to know. Even now in my mid 30’s it feels so far off and a pie in the sky dream. But starting and boosting your retirement savings early can make or break what you get when the time comes.

Planning for your retirement is essential at any age as your pension will play a crucial role in how you life your golden years. And with the average age creeping up and up you may rely on it for a while.

Here are some tips and strategies to boost your retirement savings.

Start your retirement savings early

If you saved £100,000 over 40 years you’d end up with so much more than if you saved the same amount over 15 years. And that’s thanks to the beauty of compound interest. So the earlier you start saving, the more time your money has to grow.

With compound interest you earn interest on both the money you have saved alongside any interest you’ve earned. For example you could save £500 a month for 20 years in a 2% interest account you’d have saved £120,000. But with compound interest you’d have £145,784.22 so over 25K extra. This is because at the end of year one you’d get 2% interest on the first £6,000 you’d saved. So you’d have £6,120. Then a year later you’d have the £6,3620.40 because you’d have the £6,120 from year one, an extra £6,000 you’d saved and then 2% interest on top of that. And this will carry on for the whole time that you’re saving.

Even small contributions in your 20’s can help grow a substantial figure by the time you reach retirement age.

Take advantage of employer matched contributions

You can start saving for a pension at any point over the age of 18, but auto-enrolment with your employer kicks in from 22 if you’re earning over £10,000 a year. Most employers will offer a matching contribution to your pension plan up to a certain percentage. For example if you save 6% they’ll also put in 6%. According to Pension Profiles the average employer contribution in the UK is 4.5%. The higher the match figure the better the benefit is.

So take advantage of the matched contribution as this is essentially free money that can boost your retirement savings. If you can afford to contribute at least enough to qualify for the full employer match so you’re not losing out on money.

If you’re self employed there are pension schemes and methods you can look into.

Contribute as much as you can afford to retirement savings

This may seem like a bit of an obvious one, but contribute as much as you can afford into your pension plan. Look at increasing your contributions if you get a raise or bonus as it’s money you never had before. This is exactly what I did when I moved jobs, so some of the pay rise I got went into my pension pot.

By consistently contributing to your pension over time you can build a good retirement savings cushion.

Check you qualify for full state pension

There have been changes in the state pension offer for anyone born after 1951/1953. Previously you had to have contributed at least 35 year’s National Insurance to get full state pension. So if you took time out of work to raise a family or travel, or you changed to part-time or self-employed work and didn’t need to contribute you’d be penalised.

The new rules state that you only need to have paid in for a minimum of 10 years. But this is dependant on whether you, your workplace or private pension scheme contracted out of Additional State Pension.

You can check how many years of contributions you’ve made through the Government Gateway, which you need to register for.

Boosting your retirement savings

If you want to have a comfortable and financially secure retirement it’s time to maximise your pension pot.

Remember the key to a successful retirement pot is starting early and saving as much as you can over time. Every pound saved will help.