You might think that retirement is a long way away. But when you really think about it, is it? Ten years can soon fly by. So if you don’t start making preparations now, you could be in for a nasty financial surprise. Fortunately, there’s plenty of things that you can do to increase your pension payout. Here are some tips to get you started.
Pay In More And Defer
In the run up to retirement, many people worry that they won’t have enough money saved up. This can be a serious problem, but there are both ways to solve it and ways not solve it. In general, it’s a risky idea to try to boost your pension income by investing in higher risk assets. Higher risk assets might promise better returns. But they also promise to wipe you out if the stock market crashes.
A much better idea is to either add payments to an existing scheme or delay the date you take retirement income. If you’re worried that you won’t have enough money to see you through retirement, deferring your pension might be a good idea.
Swap To A Cooperative
Superannuation cooperatives, like NSF Super, aren’t interested in making a profit. Rather, these organisations are member based and work in the interest of all their members. For people saving for their pensions, that’s a good thing. It means, in theory, that more of the money they save will be returned to them. Fees are generally lower and the quality of service higher than in regular pension fund saving schemes.
Ditch Underperforming Assets
When you first set up your pension, it might have seemed like a good idea to invest in certain assets. But over time, those assets have lost value. And right now, there’s little prospect that they will recover.
Nonperforming assets are one of the biggest reasons people become dissatisfied with their pensions. So the best policy is to weed them out of your retirement portfolio as early as possible. If you have to, talk to your financial adviser about switching to a new scheme.
Use Alternative Saving Methods
Pensions aren’t the only place where you should keep your savings. There are other opportunities elsewhere that also afford a decent return. ISAs are one example of another place you should put your money. Savings accounts have one key advantage over regular pension funds. They allow you to access your money instantly. Thus, with a savings accounts, you’re not locked into any fixed term before you can get access to your money again. It just adds extra flexibility, and means you’re less likely to have to drawdown your pension early.
Start Sacrificing Salary Early
Salary sacrificing schemes never feel good at the time. But they are the best way to ensure your pension pot fills up quickly. Each month, your employer automatically deducts a chunk of money from your pay packet and puts it into a pension fund.
These schemes are tax efficient because you are sacrificing income to pay into your pension, saving on income tax. And in some countries, employers have to equal the contributions of workers, making them even more lucrative.