Making a decision before April 5 could pay dividends (Image: Mike Kemp, In Pictures via Getty Images)
Saving for retirement can feel like a daunting task, especially for single individuals. Nearly one in five don’t believe they’ll ever be able to afford to retire, according to Scottish Widows.
The study found that 19% of single people can’t envision a scenario where they’ll be able to cease working. This is in contrast to one in seven (13%) of those who are married or cohabiting who don’t believe they’ll ever have enough savings to retire.
The research revealed that two-fifths (42%) of those in a relationship or marriage are optimistic about retirement, compared to just three in ten (30%) future retirees who are single. Half (50%) of those with a partner claim to have conducted research to prepare for retirement, as opposed to 37% of single individuals.
The majority (57%) of those in a relationship or cohabiting have also checked their state pension entitlement, compared to a third (33%) of single individuals. Those in a relationship or cohabiting are also more likely to have received financial advice, with a quarter (25%) saying they have done so, compared to 13% of single individuals.
They also feel more confident about managing their savings in retirement, with seven in ten (70%) of those with a partner feeling confident, compared to 51% of single individuals, according to the YouGov survey of over 5,000 UK residents.
Susan Hope, from Scottish Widows, highlights the connection between financial stability and relationship status: “Our research shows that there’s a close link between financial security and relationship status.
It pays to be on top of your pension (Image: Alamy/PA)
“If you’re married or in a relationship there may be more options to share costs and the potential to combine savings resources that a single person may not have, even if couples might need a bigger fund overall.”
Find out what you’re on track to receive
The retirement guru suggests practical steps for individuals to manage their pension savings, starting with understanding your current trajectory. “Downloading the HMRC app is a quick and easy way to see in a few taps your state pension retirement age, how much state pension you are entitled to and if you have any national insurance gaps,” states Hope.
In addition, the “check your state pension forecast” service on the gov.uk website provides an avenue for prospective retirees to gain insight into their future pension. Importantly, she underscores a vital cutoff date looming for boosting state pension funds by filling national insurance contribution gaps.
People can act until April 5 this year, filling gaps in their national insurance record going back to the year 2006; however, after April 6, 2025, individuals will only be able to make these voluntary contributions for the last six years—keeping within the usual limits.
If you’re finding it tough to meet the deadline, you have the option to request a callback on gov.uk. This could allow individuals to make voluntary national insurance contributions even after the deadline – as long as the callback request is lodged by April 5. To qualify for the full new state pension, people generally need 35 years of contributions.
Making decisions now could mean a big difference later in life (Image: Alamy/PA)
However, under certain conditions, they might be eligible for credits when not paying national insurance; further details can be found on gov.uk. “Taking action now could help you maximise your state pension entitlement,” advises Hope.
Look at the bigger picture
When considering the broader financial landscape, especially for couples, Hope recommends discussing earnings and debt repayments to enhance future income prospects. Additionally, exploring workplace benefits and perks through your employer may reveal ways to extend your finances.
Hope comments: “Much of this is still important for those not looking at a joint financial picture, so understanding what you might need versus what you have or are on track to have and whether that’s enough will help get you in the right position.”
Those aged 50 and over could take advantage of a free consultation with the Government-backed Pension Wise service. Online tools and information, such as calculators from pension providers and the retirement living standards outlined by the Pensions and Lifetime Savings Association (PLSA), are also available.
These standards aim to provide an insight into the potential lifestyle one might lead in retirement. Some individuals may find it beneficial to invest in personalised financial advice tailored to their unique circumstances and needs.
Various pension options should also be considered. For instance, Hope points out the availability of online private pensions and retirement annuities, which offer a guaranteed income post-retirement.
Each option carries its own advantages and disadvantages, thus careful consideration is crucial. Some may opt for a mix of income sources to fund their retirement, such as part-time work, monetising a hobby, renting out property, or utilising pension savings.
Don’t leave ‘free’ money on the table
Hope advises not to overlook ‘free’ money, stating: “Understand the make-up of your workplace pension. Many employers match your pension contributions, which is free money. Check what your workplace offers and see what you can do to boost your pension pot.”
Hope also recommends hunting for any old pensions from past employment and pondering the potential benefits of consolidating them. However, she warns that there could be instances where transferring funds might not be the wisest move, thus requiring thorough deliberation.
She points out that finding old pension pots can take mere minutes but can significantly enhance your engagement with your future financial situation. For those struggling to locate forgotten pension funds, the Pension Tracing Service offers a helping hand in rediscovering “lost” pension pots.
