How Big Should My Pension Be at 50?

How Big Should My Pension Be at 50?

Are you nearing the end of your career and wondering how big should my pension be at 50? If so, then this is the perfect guide for you.

After all, your pension is often the biggest retirement fund you’ll ever have, so it’s incredibly important that you maximise it as much as possible so you have more funds when you retire to live off. 

In this post, we discuss pension pots when you’re 50, how to make the most out of your pension pot and how to plan for your retirement. If you’d rather skip the reading and speak with a pension adviser straight away use the button below to book an appointment.TABLE OF CONTENTS

  1. What is a good pension pot at 50?
  2. Retirement planning
  3. How to retire at 50 or earlier
  4. Do I have enough to retire?
  5. Is it too late to save for a pension at 50?

Thinking about your pension doesn’t need to be a daunting task. If you have a rough idea of what you have in your current pot, then great—but if not, then there is still time to get your head around it.

At the age of 50, ideally, you would have wanted to save over 4 times your annual salary if you would like to retire comfortably. At this age, you should be considering putting 25% of your salary into your pension pot, if not more. If you’ve reached the age of 50 or older and haven’t yet planned for your retirement by putting money away into your pension pot, don’t worry!  

It is never too late to start planning for your retirement. Even if you have not yet saved much for your retirement, there is still time to get your head around it. At the age of 50, you should be thinking about what you’ve put away so far and what you can contribute in your last few working years. Retirement planning can seem boring, but it should be an exciting part of your life. Once you have a comfortable, secure and fun retirement, you’ll be ready to embark on a whole new chapter. 

Retirement planning requires you to consider several factors. First, you have to think about the types of retirement accounts that could help fund your future. Then you have to decide how much time you have before you retire and what your goals are. 

Finally, you need to put effort into saving money and investing it in growth-producing assets so that your money will be there when you need it. The main takeaway when it comes to planning for your retirement is to start as early as possible, in order to take advantage of the power of compounding. 

At the age of 50, although you won’t necessarily have as much time left to maximise your pension pot, you still have time to put enough money away so you can live comfortably in retirement. If however, you plan to retire at 50 or earlier, then you’ll need to rethink your retirement plan. If you plan to retire at 50 or even earlier, it’s first important to clarify what retirement actually means for you. Some people may define retirement as simply leaving their full-time career for a more flexible part-time job as they would still like to earn some income. 

Others may see retirement as complete financial independence so they can just play golf or spend time at the beach whenever they like. Assuming you want this second life and want to achieve financial independence, there are a few things you need to consider in order to retire earlier. [vc_column_inner width=”1/2″]One of the best ways to ensure you can retire earlier is to avoid getting into debt or to pay off any existing debt.

If you have multiple debts such as credit cards or loans, this can cause a financial strain on many individuals, especially if you’re nearing retirement age and it’s getting harder to work.

Being debt-free when going into retirement will be a massive bonus. [vc_column_inner width=”1/2″]One of the best ways to save more money so you’re able to retire earlier is to simply live a similar lifestyle, so you can’t spend as much money.

If you’re able to, work out all your outgoings and look for areas where you can cut down on your spending.

For example, instead of spending money on eating out, try cooking more meals at home. You’ll soon see how changes like this can add up. [vc_column_inner width=”1/2″]Being able to get a mortgage on your very own property is a dream for most people, and can signify success and financial abundance. If you want to retire earlier then paying off your mortgage will be hugely beneficial. Although this is very difficult, it is possible. 

In order to pay off your mortgage early, you should make overpayments on the mortgage if you can afford them. The upshot is that you’ll pay off your loan sooner, and save a lot of money in interest payments.

However, it’s important to note that some mortgage lenders may charge you a fee for paying off your mortgage too early. If you’re committed to retiring early, then you’ll want to take advantage of all the pension benefits you are entitled to, along with maximising your pension pot.

There are a few ways you can get the most out of your pension and increase the amount of money you have in your pension pot.

Below you will find a few ideas we’ve put together to help you maximise your pension pot. 

Auto-Enrolment Pension Scheme

Firstly, you should make sure that you are signed up for an auto-enrolment pension scheme. In 2012, the auto-enrolment pension scheme came into place, which should ensure that every employed individual has some sort of pension in place. 

An example of this is adding 5% of your income into your pot and your employer may then also contribute a percentage over 3%, depending on what you wish to add. This can be reviewed on a yearly basis and altered if need be. 

Some individuals will get more benefits from their employer with the more they decide to put in. Although this is an auto-enrolment scheme and it’s highly likely that you’ve already been receiving these benefits, it’s still worth checking to make sure. Consider your choice carefully

Secondly, you should definitely consider if retiring early is actually what you want and if it will be financially viable. The longer you leave your pension pot, the more money you will have by the time you do actually retire.

So if you’re thinking about retiring early, be mindful that you won’t have the biggest pension possible.[vc_column_inner width=”1/2″]On average, people have 12 to 15 jobs in their lifetime. Because of these multiple employers, it’s common for people to lose track of their pension pots.

Fortunately, most pension providers provide annual statements with information on all of your pension pots.

If you don’t receive a statement from your provider, you can use the government’s online pension tracker or call the Pension Tracing Service for assistance in finding lost pension pots.[vc_column_inner width=”1/2″]Another option is simply increasing your working hours or cutting down on your spending habits so you have more money to contribute to your pension pot.

Although this might be the opposite of what you want, for now, it may be worthwhile in the long run when you have more money and less financial stress when you retire. [vc_column_inner width=”1/2″]Deciding if you have enough funds in your pension pot to retire is completely your decision. It’s difficult to answer this question as everyone is different and lives a different lifestyle.

Some individuals may require less because they have more modest spending habits, whereas others may want to continue their lavish lifestyle into retirement so will require more money. [vc_column_inner width=”1/2″]To give you an idea of the typical pension pot in the UK, life insurance provider Aegon states that the average pension pot in the UK currently stands at nearly £50,000 with men saving an average of £73,600 and women saving an average of £24,900.

What do you think? Are these figures enough for you to live on comfortably or will you need more?[vc_column_inner width=”1/2″]As already discussed, the best time to start your pension is as early as possible, so you can make the most of your contributions through compounding interest. However, if you are 50 years old or older and haven’t yet got a pension or haven’t put much towards your current pension pot, please don’t worry. 

Early retirement will probably be off the cards if you’re 50 without a sizeable pension already, but all is not lost.[vc_column_inner width=”1/2″]Even at 50, you can still take advantage of workplace pension benefits but you’ll probably need to just contribute more each month to your pension pot. 

Having said that, it’s a rare occurrence that someone of 50 won’t already have some sort of pension in place, so it could be worth checking out the government’s Pension Tracing Service to see if you have any old pensions from previous jobs you’ve forgotten about. 

Book an Appointment with a Pension Adviser

If you want to reconsider your current financial circumstances or make any changes going forward, it is advised that you consult with a financial advisor to assess your situation.

But please remember that the value of investments and any income from them can fall as well as rise and you may not get back the original amount invested. HM Revenue and Customs practice and the law relating to taxation are complex and subject to individual circumstances and changes which cannot be foreseen

St Barts Finance has grown to become one of the most trusted pension advisers in Bournemouth and surrounding Dorset areas. If you need help with your pension, we have offices in Bournemouth and Poole and can arrange video calls or telephone calls to our clients all over the UK. 

Just call us on 03300 562 218 or send an email to [email protected]. You can also use the following button to speak with a pension adviser directly.