This article was last updated on 31/10/2024

Money worries can range drastically - from having to tighten the budget a little to finding yourself unemployed and unable to pay essential bills - one thing applies to all of us: talking about money is crucial to avoiding further problems.

From understanding why talking about money is important, to learning how to talk about money in a relationship, we have you covered.

Why we need to talk about money

In 2022 the Money & Pensions Service surveyed 3,000 adults. It found that 81% of people avoid discussing their finances.

While this is perhaps unsurprising for a nation once taught that it was impolite to talk about money, attitudes are slowly changing. For example, we now have Talk Money Week; an annual celebration of the work thousands of organisations are doing to improve money management across the UK. Its main goal is to get more people talking about money in all of its forms and there are lots of ways employers, charities, and individuals can get involved.

As a company that’s passionate about simplifying pensions and putting people back in control of their retirement savings, it’s our job to encourage people to talk about money. Here are just three of the reasons why we feel it’s so important.

To teach financial literacy for younger generations

It makes sense that the earlier a child is introduced to money, the better equipped they’ll be to manage it for themselves when they’re older. Earning money and knowing how to budget and save are key life skills that can be taught from an early age.

Whether that’s being transparent about family finances at home, encouraging children to complete small tasks to earn pocket money or getting them started with investing, there are lots of things you can do to help ensure money isn’t a source of stress in later life.

To improve our mental health

Money troubles have a habit of weighing on our minds, and it can lead to a great deal of anxiety. When things are tough, it can feel tempting to bury your head in the sand and avoid the subject altogether. But this doesn’t help. The problem doesn’t go away. And while the adage ‘out of sight, out of mind’ might apply to some situations, when it comes to money the opposite is likely to be the case.

On the other hand, addressing financial challenges head-on by talking about it with the right people can be an empowering and emotionally rewarding experience. Your first port of call might be a partner, family or a close friend. And even if those aren’t available to you, there are specialist organisations you can speak to confidentially and for free (see the end of this article for a list).

To make better financial decisions

The more accurate information you have, the better decisions you’re able to make. For example, someone who’s ashamed to share a poor credit score with a partner might lead to a joint mortgage application being rejected. But if they’d spoken about it sooner, they might have been able to take steps to improve it before looking to buy a home together.

There are many ways you’re able to make better decisions when you have all the information to hand. But it first requires you to be open and honest about your situation.

To narrow the pay and pensions gaps

For a long time we’ve known that women have been short-changed in the workplace, with gender inequality in pay going back generations. But it wasn’t until the government compelled public bodies and organisations with more than 250 employees to disclose staff salaries in April that we saw just how bad it was. Huge companies were named and shamed and they’ve been left with no choice but to take action. That’s what can happen when we start to talk about money publicly.

Where there’s a pay gap there’s also a pensions gap: if women are paid less at work, they’ll be paid less in retirement. The pensions gap steadily increases with age, with some data suggesting it’s as wide as ^_higher_rate, in favour of men, by age 50.

To build a better future

No matter how far away retirement can seem, it’s never too early to start meaningfully contributing to your pension. The sooner you start saving, the more time your pension will have to grow, and the less you’ll need to save each month. Learning about things like compound interest can help you turn a small savings pot into a significant amount when it’s left untouched.

We’re passionate about making pensions transparent, fair and accessible to everyone which is why we’ve designed an easy-to-use online pension that enables you to monitor your pension balance, calculate your projected retirement income and set up contributions in just a few clicks.

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How to talk about money

There’s no need to fear or avoid talking about money with your family or partner. But it helps to go into the conversation prepared and with a positive mindset. So if you’re wondering how to talk to your partner about money, consider the following before you sit down to have that chat.

Prepare for the conversation

Like a well-baked cake, a conversation is more likely to turn out well when you use the right ingredients. So what are the right ingredients?

Time The best time to talk about money probably isn’t going to be after work or while you’re getting ready for a Saturday night out. So choose wisely.

Don’t pick a moment when either of you are stressed, tired or in a rush. Rather, choose a moment when you both have some downtime, are feeling positive and have some energy. Saturday or Sunday after brunch could be a good option.

Make sure you give your family or partner enough notice, too. Not everyone will appreciate having a financial chat sprung on them!

Location While speaking openly about money with your family or partner is encouraged, you might not feel so comfortable talking about it in the presence of others. So consider having your chat in the privacy of your home, a secluded spot in a cafe or while you’re out for a walk.

If you don’t live together, you might also want to hold your conversation on ‘neutral territory’ - ie. not at one of your homes or local cafes. This can help put both your minds at ease, since it creates a neutral atmosphere that avoids any emotional power plays.

You’ll also want to make sure that you’re sitting at equal heights in similar chairs, so that it doesn’t feel like one person is being spoken down to or interrogated.

Talking points or goals Have you ever left a meeting - perhaps at school or at work - feeling like it was a complete waste of time? Often, poor meetings are the result of unclear agendas and poorly defined goals. No one’s sure exactly why they’re there or why they’re there.

For a finance chat to be successful, you both need to be clear on both of these things. So consider how you plan on introducing the discussion so that it’s clear enough to avoid any confusion.

If there are several things you want to talk about, consider splitting them up into several conversations. That way, the ‘agenda’ and goals of each discussion should be crystal clear and will also allow you more time to have a good conversation.

Start the conversation

Once you’re clear on what you want to get out of the conversation, and you have an idea of where and when the best time is to have it, it’s time to bring it up.

Bear in mind that everyone’s different. Some will be fine talking about money at the drop of a hat, while others might prefer some warning. Suddenly asking “What’s your credit score?” as you’re having dinner after work may not result in the calm and collected answer you were expecting. If you think the other person would appreciate a heads-up - and we dare say that many will - then consider introducing the idea of talking about money gently and agree a time to discuss it.

On the other hand, sometimes waiting for what may be perceived as a ‘big discussion’ can cause a great deal of tension and anxiety. So you may decide that just coming out and saying it is the best approach. That’s fine too, so long as you do it at the right time and location (as explained above).

It’s likely you’ll know the other person well, so use your judgment to decide the best way forward.

Take turns to speak

Talking about personal finances can be difficult and emotionally charged, particularly if one or both of you are experiencing money problems.

Giving each other plenty of uninterrupted time to speak helps give you both the necessary time to gather your thoughts and to form a reply - something that can be difficult when discussing a topic for the first time!

It also reduces any stress or tension, since neither of you will feel like you’re under pressure from the other. And it can create a more welcoming environment which invites you both to speak openly and honestly.

Be honest

While talking about money shouldn’t result in feelings of embarrassment or shame, it’s not uncommon to experience emotions. We live in a society that tends to focus on financial success rather than financial hardship, after all. So it can be difficult to open up and speak honestly about your situation if your finances aren’t in good shape. But speaking honestly about your finances is crucial, and it’s important for your family or partner to be honest too.

Being honest allows you to see the situation as it really is. It allows you to understand the future impacts of your situation. And it arms you with the necessary information to begin to address it and correct it.

When you’re preparing how to talk about money in marriage or at other stages in life, be sure not to skirt around the issue or lie about it. This could lead to further financial hardship and a breakdown of trust between you and your family or partner.

Be aware of emotions

Talking about new or difficult topics can be emotionally hard. All sorts of feelings may bubble up which could lead to conflict or turmoil if not dealt with in the appropriate manner. So how do you deal with emotions when talking about money?

First, remind yourselves why you’re having the conversation - what’s the goal you’re trying to achieve? This can act like a switch, helping the brain reset back to using logical processes rather than emotional ones.

Second, reaffirm that you both want to see a positive outcome from the conversation. You didn’t sit down to argue or get upset. Reminding yourselves that you’re on the same team may help you conquer any emotional hurdles together.

Lastly, try to show empathy towards each other. Acknowledge that talking about money isn’t easy for many people, and allow each other the chance to fully express themselves without fear of judgement or dismissal.

Agree any actions

Talking about money is a crucial first step towards effectively dealing with your finances, but you must agree to act on any decisions that are made.

Consider writing down any actions that you need to take before the conversation concludes. This might include:

• Researching a particular question or topic
• Calling a bank or loan provider
• Downloading a credit report
• Gathering relevant paperwork
• Seeking help from a support organisation

How to talk to partner about money

Talking to your partner about money can be part of a healthy relationship. Discussing your finances regularly can help you deal with small problems before they grow into big ones. So try to find time to make it part of your routine, perhaps by agreeing to talk over brunch or a long walk every month.

If you do find yourself in a more urgent situation or in need of having a ‘bigger’ discussion, consider following the steps outlined above. The advantage of being in a relationship is that you’ll probably have a good understanding of one another, allowing you to avoid some of the emotional pitfalls that can get in the way of a productive discussion.

Where to go if you need help

Money can be a confusing and complex area at the best of times, and it can be particularly stressful if you’re experiencing financial difficulties. In those situations, sometimes talking about money isn’t enough and further guidance is needed.

If you’ve already had ‘the big chat’, of you’re just not sure how to talk to your spouse about money problems, there are plenty of organisations that provide free advice for those experiencing financial difficulties:

• Citizens Advice
• Money Helper
• National Debtline
• StepChange Debt Charity

Downsizing to a smaller and more affordable home can be a great way to free up money to help fund your retirement. But is it right for you?

What is downsizing?

Downsizing is simply the term used to describe moving from a larger home into a smaller one.

It’s most common amongst those approaching retirement due to certain lifestyle changes that occur around that time. This might include seeing the kids move out, not wanting to spend so much energy maintaining a large home, and wanting to free up some extra cash to spend in retirement.

Deciding whether to downsize for retirement

Before you up-sticks to a smaller home, you’ll want to consider whether downsizing is right for you.

Would you be happy in a smaller home?

Smaller homes tend to be easier to maintain and manage. You’ll have fewer - and possibly smaller - rooms to clean and keep tidy, saving you time and energy. This might be one of your main considerations as you get older.

But there’s also less space to move around in a smaller home, of course. And while you might not be moving into a cabin, you might want at least enough space to entertain family or friends when they visit.

Where would you want to live?

When choosing a new area to live, you’ll want to consider whether it can sustain the kind of lifestyle you’re hoping to maintain - is it home to your favourite supermarket, does it have a cinema, are there social communities of people who are a similar age?

You’ll also want to consider how easy it is to get to for any of your family or friends you might like to invite for a visit - you don’t want to be too isolated (or maybe you do!)

For more information, read “Best places to retire in the UK”.

How much money can you free up by downsizing your home?

Downsizing your home to free up cash to spend in retirement is one of the most common reasons to downsize. But the amount you need will depend on your desired location and lifestyle.

Check your pension to see how much you can expect to receive during your retirement, then calculate how much you plan to spend. If the numbers don’t add up, you might want to look into whether selling your home and moving to another area might improve your lifestyle.

See how much money you could free up by downsizing to a new area with our “Downsizing across the UK” guide.

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How much is your home worth?

This will be the biggest factor affecting where you can move to, and how much money you could free up by downsizing.

Thankfully, it’s simple enough to find out how much property is selling for in your area using a property portal like Rightmove and Zoopla, and you could also use the Land Registry.

When you’re more serious, you’ll want to ask an estate agent to give you a rough valuation.

Can you afford a suitable home in a suitable location?

Of course, your options may be limited by your budget. So once you know how much your home is worth and you’ve taken into account any other money you have access to, you’ll want to start looking around for a new home.

Read our “Best places to retire in the UK” article to get started, and once you’ve a better idea you can start looking at property online using portals like Rightmove or Zoopla. There’s no better way to get to know an area than visiting it in person, so once you’ve found an area you like and can afford, why not take a weekend break in the area?

Will your ongoing costs change?

Every home is different; from the size and layout of its rooms to the quality of its insulation. If you’re moving from a Victorian-era home with large rooms and high ceilings to a modern flat, you might find that your heating bills reduce significantly.

You may also find that your own personal living costs go up or down depending on your planned activities (golfing lessons, anyone?) as well as your health requirements. As much as no one likes to think about it, it’s possible that we might require extra care as we grow old. Things like private home care can be expensive, so this may be worth factoring in depending on your age.

Do you really want to move out of your home?

Moving home is as much of an emotional decision as it is a practical one, particularly if you’ve lived at your current home for many years. Other circumstances can make it difficult to move too - you might have built your home yourself or made significant renovations that might feel like an extension of your identity, for example.

Your home might also be perfectly located between friends and family or it might even have great transport links into town where you enjoy spending evenings at the theatre!

If you have reservations about the idea of moving, there might not be any harm in waiting a little longer to make your move.

The pros and cons of downsizing your home

There are plenty of reasons to downsize, but there are also plenty of things to think about before you do!

Benefits of downsizing your home

• Free up cash to use during your retirement
• Pay off your mortgage or other loans
• It’s easier to manage and maintain a smaller home
• Running costs should be lower
• Other bills could be lower (eg. council tax)
• You might be able to move to a nicer location, even while paying less on a home

Downsides of downsizing your home

• Moving costs
• The emotional cost of moving from your long-term family home
• Leaving friends and family behind
• You’ll need to adjust to a new lifestyle
• You’ll need to free up a lot of money to live off it
• A smaller home might feel limiting

How to downsize (a step by step guide)

If you’re wondering exactly how to downsize for retirement but aren’t sure where to begin, here’s a simple step by step plan.

1. Get your home valued

An estate agent (or two) can give you a quick estimate by visiting your home. The service is complimentary and you won’t be obliged to sell the property with them.

2. Declutter and identify any large items you want to keep

Moving is a great time for a fresh start. So go through the loft and your old cupboards, and start chucking out anything you don’t want to bring with you to your new home.

Don’t want to part with your perfect sofa? Can’t bear to leave that family heirloom behind? Tag them so you don’t forget, and take their measurements so you’ll know if they’ll fit in your new home.

It’s better to do all this before listing your home for sale so that you have plenty of time to get through everything before the viewings begin.

3. List your property for sale and start viewing properties

It doesn’t really matter in which order you start selling your home or viewing properties, since there’s no way of knowing how quickly either process will go. But you’ll want to do both around the same time so that the process isn’t slowed down when you find a buyer or fall in love with your dream home.

Decide your budget from the future proceeds of your home sale (don’t forget to factor in selling and moving costs like solicitors and van rental, for example), and start by looking online for your new home using a property portal like Rightmove or Zoopla. When you find somewhere you like, arrange a viewing and make an offer! Selling and buying might take as long as 3-9 months, depending on the market.

4. Inform your friends and family

Moving to a new area can be an emotionally demanding time, so you’ll want to retain the support of your nearest and dearest. Consider throwing a leaving party or even inviting them to your new home when you move in! You’ll certainly want to give them your new address so you don’t lose contact.

5. Move into your new home!

Now for the fun part. Pack your things, hire that van (or lorry), take a deep breath, and say hello to your new home.

6. Settle into your new community

Depending on the area you move to - and your attitude to being part of the community - consider looking for opportunities to get to know your new neighbours. You could visit the local market or join a town hall meeting, for example. Or you might want to take up some classes with people of a similar age.

7. Invite the family over

When you’re ready and settled in, there’s no better way of staying in touch than hosting afternoon tea. So why not invite the family over? You’ll have plenty to talk about, and they’ll be keen to see your new home.

How to downsize your home quickly

The decision to move home shouldn’t be made in a hurry. But if you’re set on moving and you’re eager to do it quickly, here are some time-savings tips to help...

• Enroll the help of family or friends to help prepare your home for sale
• Find a reputable estate agent that has plenty of experience selling similar homes
• Find a conveyancer or solicitor that’s known for being attentive (this is often the slowest part of the process, so ignore ones with track records of being slow)
• Don’t be afraid to chase your estate agent or solicitor
• Prepare your documents ahead of time (for example, a copy of the lease)
• Prepare a list of needs and wants before viewing properties so you’re confident when you’ve found the right home
• If you can afford it, buy your next home before selling your current one
• Hire a moving company to pack your things in half the time

This article was last updated on 26/09/2025

Turning 50 is the chance to celebrate with presents, a party and a Pension Wise appointment.

Yup, grippingly, once you hit 50, you can get free guidance from Pension Wise, a service provided by MoneyHelper and backed by the government, about what on earth to do with your pension savings. Don’t knock it: Pension Wise can help stop you making pension mistakes that could last the rest of your life.

In fact the City watchdog, the Financial Conduct Authority, required, from 2022, pension companies to ‘nudge’ their customers more strongly into making appointments, before whipping out their pension cash.

But what actually happens during a Pension Wise appointment? And is it any help?

As a personal finance journalist, I was keen to find out, so I booked one and can report back.

What is Pension Wise anyway?

Pension Wise is the government service set up to help people understand their pension options. It can be used by anyone over 50 who has a defined contribution pension, as opposed to the lucky ones with final salary aka defined benefit pensions.

It’s free and impartial, because it doesn’t try to sell you anything. However, that also means it can only offer ‘guidance’ in general terms, rather than financial advice about the specific companies and funds to use, or how much to withdraw when. Be aware that you can’t book a Pension Wise appointment if:

• you’re under 50;
• you only have a defined benefit pension (final salary or career-average salary); or
• you only have an overseas pension.

What does Pension Wise offer?

In practice, you can book a 45 to 60 minute meeting with a pensions specialist, with no fear of being scammed or ripped off.

The official blurb promises:

• guidance on how to make the best use of your money;
• information about tax when taking money from your pension; and
• tips on getting the best deal, including how to compare products, get financial advice and avoid scams.
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How do you book a Pension Wise appointment?

If you’re 50 or over, you can book via the Money Helper website or by calling 0800 011 3797. There’s also web chat if you have questions.

I rather liked the phone option, rather than trekking miles to meet someone in person. The ‘trained guidance specialist’ I ended up speaking to was actually from Citizens Advice over in Worcester, the other side of the country from where I live in Suffolk.

I was pleasantly surprised to find a lot of availability when I booked midweek. Although there was nothing free the next week, there were plenty of slots between 8am and 3.50pm from the following week onwards.

I was glad to find something during school hours, but appreciate the lack of slots in the evenings or weekends could be awkward for people working full time.

Booking itself was easy - I just had to put in my name, phone number, date of birth and confirm I had a defined contribution pension. I had to add a memorable word for security checks, and answer a couple of marketing questions, but then it was all done and dusted.

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How to prepare for a Pension Wise appointment

Like much in life, you’ll get more out of a Pension Wise appointment if you do some preparation beforehand.

The email I got confirming my appointment included details on how to prepare, asking me to check:

What type of pensions do you have?

Pension Wise only covers defined contribution pensions, which are more common nowadays than generous final salary/defined benefit pensions

What is the value of your pension pots?

Find this via pension statements or by logging into your pension accounts online. While you’re at it, I suggest checking where your money is invested (the fund names) and the charges – there may be separate charges for the funds you use and for the pension provider.

If you have lost track of any pensions, contact the pension provider or try the free government-backed Pension Tracing Service.

What is your State Pension forecast?

Find out how much of the basic State Pension you’re likely to get at State Pension age by calling 0800 731 0175 or visiting their website. Use our State Pension Age Calculator to see your State Pension age and when you’ll reach it. You’ll only need to enter your date of birth.

You can use our State Pension Age Calculator to see when you’ll likely be eligible to start claiming the State Pension. You’ll only need to enter your date of bith

Does your pension pot contain any special features?

Worth checking, as some pensions have for example guaranteed annuity rates or a guaranteed pot value at a certain time. Ask your pension provider.

What are your financial circumstances in general and plans for retirement?

• jot down all your income, whether from salary, state benefits, savings and investments;
• tot up debts and repayments;
• think about when you want to stop working (realistically);
• do you want a fixed or flexible income in retirement?

What happened during the appointment?

My appointment was booked for 10.40am on a Tuesday. It started promptly, and ended up taking 40 minutes.

The first three minutes involved a security check confirming my memorable word, checking my date of birth to see I was over 50, and confirming I had a defined contribution pension.

The guidance specialist I spoke to, Andrew, explained briefly what would happen in the call, encouraged me to ask questions, and promised to email a summary afterwards.

He explained that Pension Wise doesn’t recommend products or providers, and that he would talk through what I could do, rather than what I should do. I also had the delight of listening to a recorded data protection statement and a plug for taking part in Ipsos Mori research afterwards.

Once the formal bit was out of the way, Andrew spent the next 10 minutes running through my own situation. He asked what I had saved in pensions and whether my pension pots had any special benefits. He established my personal circumstances – Married? Kids? Job? Income? Benefits? Debts? State Pension forecast?

I appreciated his explanations as we went along – asking about existing savings to discover if I would need to take a ^{_corporation_tax} tax-free lump sum from my pension pot, checking if I had a mortgage that would extend into retirement, enquiring about my health as people under 75 diagnosed with less than 12 months to live may be able to withdraw their whole pension pot tax-free. He finished with a quick recap, and my only surprise was that he didn’t ask about investments, as opposed to cash savings or pensions.

The next part of the appointment involved explaining six different options for my pension cash once I hit 55 (rising to the age of 57 from 2028). These are:

• retire later or delay taking your pension pot, leaving the money invested;
• get a guaranteed retirement income (annuity), with the option of taking ^{_corporation_tax} of your pension pot tax-free;
• get a flexible retirement income (pension drawdown), also with the option of taking ^{_corporation_tax} of your pension pot tax free;
• take your pension as a number of lump sums, where ^{_corporation_tax} of each amount is tax free and the rest is taxable;
• take your whole pension in one go, where ^{_corporation_tax} is tax-free and the rest taxable.
• mix your options.

Andrew did a good job of explaining the different options and running through investment risks and the impact of tax and pension charges.

He included some decent risk warnings: that pension investments can go up as well as down, but that money stashed in a building society account won’t grow, that you can’t change your mind after buying an annuity, and that if you withdraw more than your ^{_corporation_tax} tax-free it cuts the amount you can pay into pensions in future, down from max ^{_annual_allowance} a year to just the ^{_money_purchase_annual_allowance} Money Purchase Annual Allowance (^{_current_tax_year_yyyy_yy})*.

My interview also included practical tips: flagging that if wanted to use flexi-access drawdown, I might need to transfer to a different pension provider, but should check if I’d be hit by exit fees or lose any benefits attached to my existing pensions.

The big warning about pension scams came about half an hour in, emphasising the importance of checking you’re dealing with legitimate companies and not making rash decisions. Andrew pointed out that cold calls about pensions are illegal, and that anything that sounds too good to be true probably is.

He rammed home the risks of falling for a scam that involves withdrawing money from your pension pot earlier than 55. You may not only wave goodbye to those retirement savings, but may also get hit by a ^{_pension_release_tax_amount} tax penalty on the money withdrawn. Paying tax on money that’s been stolen from you really does add insult to injury.

The last few minutes included suggestions about where to go for more information, and the chance to ask questions.

Andrew explained that I could come back to Pension Wise, or contact the Pensions Advisory Service with specific queries. He flagged that Money Helper includes costs and comparisons for the biggest pension companies, but suggested paying for financial advice if I wanted recommendations for specific funds and pension providers.

I asked whether he could recommend any tools to model cashflow in retirement, given I have pensions kicking in at different times, but all he could suggest was playing around with the budget planner and budget calculator tools on Money Helper. He suggested withdrawing the ^{_corporation_tax} tax free cash, and using that to provide an income until other pensions started.

I also asked how he would recommend choosing between providers, and he suggested comparing charges, as ‘generally fees are the important part’, and reducing fees could help get the best returns.

It was quite comforting to be told that I was doing fine, well diversified with good charges. He finished off with the warning that “someone like you, with a fairly large pot, is very attractive to fraudsters”, and consoled himself that “at least now you have been warned and can look out for it”.

Afterwards, I was transferred to an exit poll, and emailed a summary of the topics discussed, including the main points and signposting me to sources of further information.

Is it worth having a Pension Wise appointment?

As someone who writes about money and pensions for a living, I was impressed with how much ground Pension Wise covered. The appointment didn’t just lay out options for pension cash, but also included important warnings about tax, scams and the Money Purchase Annual Allowance.

I was also impressed that the person I spoke to related some of the options to my own circumstances. I have a chunk of pension money and savings, with no mortgage or other debt, so he suggested that pension drawdown would definitely be suitable for me, and spent longer explaining that option, while warning that if I cashed in my entire pot I’d end up paying ^{_additional_rate} income tax.

However, a Pension Wise appointment only provides ‘guidance’ on the options available. It doesn’t recommend specific pension providers or funds, nor spoon feed how much money to withdraw when. You still have to make those nitty gritty decisions yourself – or pay a financial adviser to help.

But even if Pension Wise only makes general points, I’d still whole heartedly recommend booking an appointment, even if it only forces you do the prep beforehand: totting up the value of your pension pots, checking your State Pension, and reviewing your financial situation now and in retirement.

Fundamentally, pension rules are complicated. It’s vital to review your options before whipping money out, as some decisions are irreversible. If you hand over your retirement savings to a scammer, you may never get them back. If you take out more than your ^{_corporation_tax} tax-free lump sum, you could then massively reduce the amount you can pay into pension in future. Take out too much, and you could not only run out of money in later life, but you might face a far higher tax bill than if you spread your repayments.

A free Pension Wise appointment can help avoid expensive mistakes, so I reckon it’s well worth doing.

Now – over to you. Have you had a Pension Wise appointment? Was it useful? If not, would you consider booking one after you reach 50?

Faith Archer is a Personal Finance Journalist and Money Blogger at Much More With Less.

Risk warning: As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

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‘We are the first generation to feel the effect of climate change and the last generation who can do something about it’. These are the powerful words of the former US President Barack Obama.

Understandably, people all over the world are taking steps to reduce their carbon footprint and protect the planet: some have limited the amount of meat they eat while others have reduced the number of flights they’ll take in a year.

However, with trillions invested in pension funds, many believe that investing your pension is one of the most powerful ways you can fight climate change. Indeed, the Make My Money Matter campaign estimated that making your pension greener is 21x more powerful than giving up flying, going veggie and switching energy providers.

One of our customers, Hannah, recently explained why she decided to invest responsibly and switch to PensionBee’s Fossil Fuel Free Plan. Read on for our recent Q&A with her.

PensionBee: Why did you decide to transfer your pensions?

Hannah: I’m really conscious about where I put my money. By making small changes, I believe that we can make a huge difference as a society. With money, I think a lot of that comes down to knowing where you put your money and how it’s invested.

Auto Enrolment is a fantastic idea but I ended up with four pensions and I’m not even 30! Pensions can be a bit of a nightmare but PensionBee enabled me to consolidate my pensions into one place really easily.

PensionBee: What are your views on investing responsibly?

Hannah: I think it all comes back to the conscious decisions that we can make. We have a responsibility to the planet and the next generation in my opinion. We all have social responsibility. And it’s often the small things that you can do - such as changing the way you invest your pension - which can have a huge impact.

For example, I want to see my bank making responsible choices, such as reducing the carbon footprint that they’re making. By investing your money responsibly, I believe we can change corporations and it’s the corporations that are going to need to change in order to save the planet.

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PensionBee: Why did you choose the Fossil Fuel Free Plan?

Hannah: I prefer not giving my money to fossil fuel companies because I just don’t want my money going there. It is all well and good pressuring companies to change but while they’re making money, they’re not going to alter their behaviour in my opinion. That’s just the nature of businesses. At the end of the day, it’s their bottom line that matters to them most, not the impact that they’re having on the planet.

I wanted my money to have an impact and that’s why I chose the Fossil Fuel Free Plan. It was easy to understand and I knew that my pension wouldn’t be invested in fossil fuel companies. By investing in this plan, I feel like I’m caring about the planet and it just makes me feel better for the future.

PensionBee: What’s your view on the future of fossil fuel companies?

Hannah: At the moment, I think there is quite a lot of short-sightedness about things like fossil fuels. Eventually, it’s inevitable that we’ll see that market collapse entirely in my view. I just don’t think that it’s sustainable.

It’s also possible that non fossil fuel companies could provide a better return over the long term. Take a look at Tesla which has monopolised the market in terms of renewable technologies and Elon Musk is now one of the richest people alive which is crazy!

Ultimately, we live on a planet with finite resources and we just need to find a better way of doing things and the best way through is corporate social responsibility in my opinion. There is so much more conscious living and this generation is seeing the tipping point of that.

Risk warning:

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

When you retire, a pension will provide you with an income. For it to be large enough to fund your retirement, you’ll need to pay into it years in advance, usually while you’re working. Pensions are great because the money you pay in is usually boosted by the government and/or your employer, and then it’s invested so that it grows over time. In other words, you should get back far more than you paid in.

Usually, it’s recommended to put as much money into your pension as possible. But if you’re earning a low income, you might worry whether you can really save enough to retire at all.

Although there isn’t a specific pension scheme for low income workers, the good news is that it’s possible to retire with enough to live off, even if you earn a low income throughout your working life. Plus, the State Pension is paid in addition to your own personal or workplace pensions.

So how do you retire with enough to live off? How much do you need to pay in? And what extra things could you do to get the most from your pension? Read on to learn about ways to maximise a pension for low income earners.

How much do you really need to pay into your pension?

Your pension will need to support you throughout your retirement. So if you retire at 67 and live until 85, it’ll need to last 18 years.

But your pension doesn’t have to cover this cost alone. If you work for at least 35 years, your National Insurance Contributions should entitle you to the full State Pension income of £9,339 a year (2021/22).

How much to cover the essentials?

According to a recent Which? survey, the average individual will need a retirement income of £13,000 to cover essential living costs such as groceries, housing and utilities. For a retired couple, this figure is £18,000 (£9,000 each).

Using our pension calculator and a few assumptions, we estimate:

• a retired single person would need to pay in £60 a month from the age of 21 to earn £13,000 a year (including the full State Pension) from 67 to 85
• a retired couple could each rely on their State Pensions of £9,339 to cover their essentials

However, an essential lifestyle is very basic. It requires shopping at the cheapest supermarkets, doesn’t include recreational purchases and it doesn’t include holidays. To afford a more ‘comfortable’ lifestyle, which does include these extras, Which? says single retirees would need a pension income of £19,000 a year and couples would need £26,000 a year (£13,000 each).

And while a retired couple may be able to afford the essentials relying on the State Pension alone, bear in mind that the State Pension could pay out less by the time you retire, or the age at which you receive it could keep rising. So paying into your own pension can mitigate this risk.

The age you start paying into your pension matters

The above examples rely on a person starting work at 21 and continuing to work until they retire at 67, paying into their pension each and every month. But what happens if you start working later in life?

To cover essential living costs of £13,000 a year (supported by the State Pension), you’d need to top up your pension by:

• £60 a month from the age of 21 (including the full State Pension)
• £85 a month from the age of 31 (including the full State Pension)
• £200 a month from the age of 41 (including partial State Pension)
• £300 a month from the age of 51 (including partial State Pension)

Notice how quickly the monthly pension contributions increase the longer you leave it before you start?

To get the most out of your money, you need to start paying into a pension as early as possible. This is a result of compounding - an effect where previous investment growth experiences further growth. So £100 that grows 5% every year would be worth £105 after one year, £110.25 after two years, and so on. After 30 years, it would grow not by £5, but £21.61.

Ways to boost your pension contributions while on a low income

Now we know how much to aim for, we can look at ways to boost your pension contributions.

1. Reduce your outgoings where possible

Getting started can be as simple as drawing a line down the middle of a piece of paper, and listing your monthly income on the left and your monthly outgoings on the right. Total them up, and you’ll see how much money you’ve got left over at the end of the month (which you could put into a pension).

You’ll also see exactly where you’re spending your money, so you can consider cutting costs.

A few ways of reducing your monthly outgoings includes:

• shopping at cheaper supermarkets
• buying cheaper foods (see Netmums’ budget meal planner)
• switching utility suppliers
• cancelling subscriptions you don’t use
• finding a more competitive mobile phone or internet contract

Online switching services can make things like switching utilities quick and painless. And you can use the money saved to boost your pension contributions each month.

2. Make sure you’re enrolled in your workplace pension

If you’re over 22 and earn more than £10,000 a year from a single employer, you’ll be automatically enrolled into your employer’s workplace pension. This is called Auto-Enrolment. If you earn less than £10,000 you can still request to be enrolled, it just won’t happen automatically.

With Auto-Enrolment, your employer’s required to contribute at least 3% of your qualifying earnings into your pension, and you’re required to contribute 5%.

If you haven’t been auto-enrolled, or you’ve previously opted-out, you’re potentially missing out on ‘free’ money in the form of workplace contributions. Plus, for every £1 you pay in, the government will add 25p as a tax benefit (or more if you’re a higher earner)! You can request to be opted in simply by asking your employer (they can’t refuse, by law).

3. Consider working for a company that offers a generous pension

Each company has their own pension policy, which means they could be contributing anything from the required 3% to 10% of their employee’s salaries or more.

So the next time you look for a new job, make sure to ask about the pension employers offer. Even a 1% increase in contributions can make a noticeable difference to your future retirement income.

4. Set up a personal pension if you’re not working

If you’re not working, but you still have some money set aside, you could consider starting a personal pension.

Unlike a workplace pension, you won’t get an employer top up. But you’ll usually still get the 25% government top up, which means £1.25 will go into your pension for every £1 you contribute. So it’s still a better return than putting your money away in a bank account.

That said, remember that you can’t access the money you pay into your pension until you retire. So you’ll want to make sure you have an adequate emergency fund on-hand before paying into a pension.

5. Be weary of pension provider fees

Pensions are managed by pension providers, such as PensionBee, who charge an annual fee for their service. Other providers will often charge a range of fees for various things. The important thing to note is that the total amount of fees will vary depending on the provider and pension plan you choose.

If you’re looking around for a new pension, pay attention to fees. Our own research shows that even a 0.50% increase in fees can reduce a pension pot’s value by over £10,000.

For more, read, are high charges eroding the value of your pension?

6. Check if you’re eligible for extra help

You may also be eligible for some support from the government, for example housing benefit, income support, working tax credits, child tax credits and council tax reduction.

The basic amount of working tax credit is a maximum of £2,005 a year (2021/22), but the exact figure depends on your situation and income. Use the tax credits calculator on the government’s website to find out more.

For more information about benefits and tax credits, as well as help with managing debt, check out the Citizens Advice website or drop into your local Citizens Advice Bureau.

Also read, Will taking my pension affect my benefits?

7. Benefits for low income pensioners

If you’re already retired and are receiving a small pension, you may be entitled to benefits. A key one is Pension Credit, which tops up your pension if you receive less than £177.10 a week (£270.30 for couples) for 2021/22.

There are many other benefits available that could support your expenses, including:

• Housing benefit
• Winter fuel payment
• TV licence discounts
• Council tax discounts
• Free prescriptions
• Free or discounted travel passes

8. Consolidate old pensions into one plan

If you’ve worked for previous employers, you might have paid into a pension while you were with them. When you leave a company, your pension continues to exist - your money will remain invested and you’ll continue to pay fees to your provider (these are usually taken directly from your pension).

There are a few downsides of having lots of old pensions:

• They’re harder to keep track of, which increases the chance of forgetting about them entirely
• It’s harder to estimate what they could be worth at retirement, which makes it harder to plan accordingly
• You could be paying more than you need to in fees, which can reduce the amount of income you’ll get when you’re retired

To avoid these pitfalls, you can combine your old pensions into a new one. PensionBee can help you do this for free.

With PensionBee:

• you’ll have just one place to check in on your pension, online or using the app
• you can use calculators to estimate how much you’ll receive in retirement
• you can adjust your contributions easily, to match your financial situation
• you’ll pay just one simple fee of between 0.50% and 0.95% depending on your plan

To combine your old pensions, sign up to PensionBee today.

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Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

One of the most well known tips for managing your money is the ‘not all your eggs in one basket’ strategy. Simply put, diversification. But why is it good to diversify your investments and what does a diversified pension look like?

Why is it good to diversify your investments?

If you’ve got your pension invested in the same type of investment you’ll be more exposed to the pros and cons of that particular investment. This is because you’ll have no other types of investments to balance those pros and cons. By investing your pension across several types of investments you’ll achieve diversification.

Most pensions are already diversified, across a range of locations and asset classes. This means your retirement savings could be invested in company shares, bonds, cash, property and other assets, across the globe, depending on the plan you’ve chosen.

This approach means that any decline in one type of asset or location can be offset by growth in the others, with the aim of achieving not only balance, but ultimately growth over the long-term.

What a diversified portfolio looks like

All investments fall within groups known as ‘asset classes’.

Some aspects of your investment - duration of investment, growth potential, inflation protection, level of risk, market volatility - will vary depending on the asset class. There isn’t a perfect investment, each has pros and cons.

Here are five common asset classes that your pension might be invested in:

1. Equity

Equity investors use money to buy part of companies, particularly through stocks. Depending on how these company shares perform the investment can rise and fall. If the company performs especially well then they usually pay out small sums of money for holding shares, also known as dividends.

What are the benefits of equity investments?

• More likely to produce higher returns
• Likely to grow in line with inflation

What are the downsides of equity investments?

• Higher level of risk
• Greater exposure to market volatility

2. Fixed income

Fixed income investors lend money to companies or governments in the form of bonds or debt funds. Often they receive fixed interest initially and are repaid their original investment when the investment duration ends.

What are the benefits of fixed income investments?

• More likely to produce higher returns
• Likely to grow in line with inflation

What are the downsides of fixed income investments?

• Longer duration of investment
• Higher level of risk

3. Cash

Cash investors save money at a modest interest rate, similar to an instant access savings account. Of all asset classes cash is the most accessible - with the power to purchase anything - yet the most flat in terms of financial growth.

What are the benefits of cash investments?

• Shorter duration of investment
• Lower level of risk

What are the downsides of cash investments?

• Less likely to produce higher returns
• Unlikely to protect against inflation

4. Property

Property investors have stakes in property trusts and receive gains through commercial or private property income. Often they have a small portion of many properties through a trust, unlike mortgages where you own a large portion of a single property.

What are the benefits of property investments?

• Likely to grow in line with inflation
• Lower level of risk

What are the downsides of property investments?

• Longer duration of investment
• Less likely to produce higher returns

5. Commodities

Commodity investors use the value of agriculture and raw materials, not companies’ performance, to create gains. These investments depend on the value of core resources like gold and oil in order to create profit.

What are the benefits of commodity investments?

• Likely to grow in line with inflation
• Lower level of risk

What are the downsides of commodity investments?

• Less likely to produce higher returns
• Greater exposure to market volatility

Getting the most out of your savings

Diversifying your investments can help balance the pros and cons of each asset class.

If you’re not sure which to choose, we’ll automatically invest you in one of our two default options; our Global Leaders Plan if you’re under 50 or our 4Plus Plan if you’re 50 or over.

Find out about the performance of the PensionBee plans so far in 2021.

Planning ahead for retirement

Your pension is a long-term investment. This gives you plenty of time to top it up, track its progress, and plan for your retirement. Doing this for several scattered pension pots could be hard to keep track of, which is why consolidating pensions into one plan could be worth considering.

About our plans

• With PensionBee each of our plans is specially designed to suit different savings needs - including our Climate Pension Plan.
• You can sign up with PensionBee and be enrolled in our Tailored Plan. But you can choose the plan that’s right for you and switch for free at any time.
• You only pay one simple annual fee taken from your pension pot. Annual fees range from 0.5^{_personal_allowance_rate} to 0.^_rate depending on the plan you choose.
• Your fees are halved for any amount above ^{_high_income_child_benefit} to reward saving e.g. our Tracker Plan costs 0.^{_corporation_tax} for any amount over ^{_high_income_child_benefit}.

You can check the diversification of each of our plans and decide for yourself which plan is best-suited to your needs.

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Risk warning

As always with investments, with a pension your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

We introduced the Fossil Fuel Free Plan in direct response to feedback from our customers that engagement with the major oil companies wasn’t working. Throughout 2020 our activism helped create a solution that removed the world’s largest oil producers, whilst still offering high levels of diversification and good value to savers.

Since the launch of the plan in December 2020, we’ve seen severe flooding across Europe, causing hundreds of deaths, temperatures reaching 46 degrees in Greece and Italy, leading to wildfires and an IPCC report described as a ‘code red for humanity’. The devastating impact of climate change is becoming more apparent on a daily basis, and as a result public sentiment about how we respond is changing fast.

To be sure that the current exclusionary policy of the Fossil Fuel Free Plan continues to meet the changing views of invested customers in 2021, we invited them to participate in an annual survey. Owing to the seriousness of the topic, the ^{_corporation_tax_small_profits} response rate was high for a customer survey, with a further ^{_corporation_tax} of respondents sharing fascinating written insight on their views and vision for how we divest from fossil fuels.

How views drive change

89% of respondents are happy with the plan’s exclusions, but 39% also want to see the exclusion policy expanded. Specifically, they want to exclude companies who provide associated services to the major oil producers and also banks who finance fossil fuel exploration or lend money to the oil producers. Respondents were clear that we can’t exclude all companies that use fossil fuels, at this stage of the transition.

As we always do with survey feedback, we approached the plan’s money manager, Legal & General, to discuss how we translate customer views into action. We’re pleased to share that we’ve had agreement to make the changes our customers are asking for, and in addition secure a commitment to the continued evolution of the exclusionary policy as new data and methodologies become available.

What this means is that the plan will broaden its exclusion criteria to remove companies that provide associated services to the fossil fuel industry. We are grateful to our customers for speaking out and helping to drive this change forward again.

Widening participation

The PensionBee Fossil Fuel Free Plan has attracted many people new to responsible investing. As we’ve seen from the responses in our recent survey, it’s not only succeeded in engaging a mainstream audience in important debate, but also in widening participation and encouraging more people to use their pensions in a way they believe will address the climate crisis for the first time. This is in contrast to the millions of people around the UK who may unknowingly be invested in oil, tobacco and arms by virtue of being in their default workplace scheme, as >^_rate of savers are according to the Pensions Regulator.

Many survey respondents talked of having taken the first step in their journey, and a great desire to keep pushing forward, but with a pragmatism around the major challenges and risks that come with that.

Next steps

We are proud that we not only listen to our customers, but we also take action. In addition to the plan changes that Legal & General will execute on companies providing associated services, we’ve got a commitment that future changes requested by our customers will be taken into account as their views evolve.

The first of those assessments will occur when we have the banks’ Scope 3 emissions reporting on financed emissions generated from lending and investing in fossil fuels. This will provide the data needed to be able to consider the appropriate exclusion of fossil fuel financiers. This data is not yet available, but regulatory requirements and growing scrutiny mean it will be available soon and we have a commitment to use it. As other data becomes available, the plan will continue to evolve.

Of course, the world is changing rapidly around us and the presence of new companies that are focused on green energy and making a positive impact will continue to enter the major stock markets, naturally also becoming a part of your pension plan and maintaining the appropriate level of diversification in the Fossil Fuel Free Plan. After all, as one of our customers said..

“It’s a complex issue (which you clearly know!). If we banned oil overnight people would starve because we wouldn’t be able to move food between farms and stores. I’m grateful, therefore, that PensionBee is willing to use my pension to invest for change rather than say “well you said no fossil fuels so this is it :( If you’re willing to push hard, so am I! We have a lot of work to do and not a lot of time left to do it in. What good is my pension if my house is underwater?”.

For those survey respondents who are clear they want to move more quickly, PensionBee has made a public commitment to finding a new plan that goes even further in its exclusionary policy, with a focus on positive impact. As indicated in our survey, this plan is likely to come at a higher cost and also with reduced diversification given the emerging nature of this segment in the economy.

We want to thank everyone who participated and shared their views. We rely on customer feedback to keep pushing the market forward and to closing the gap between customer expectation and the products on offer today.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

This is part of our quarterly plan performance series. Catch up on last quarter’s summary here: How PensionBee’s plans performed in 2020 (as at Q4).

With the rollout of vaccines in the UK, the recent reopening of shops, restaurants, pubs and other parts of the economy, 2021 brings hope that the end of the pandemic is in sight. As a result, we have seen UK stock markets steadily recovering towards pre-pandemic levels, whilst US stock markets are continuing to reach new highs. Nevertheless, economic fallout from the crisis may persist for some time, and investors could continue to experience some degree of market volatility, no matter where their pension savings are invested.

We began producing these quarterly performance updates a year ago, in response to feedback that you’d like to see the performance of your plan relative to our other plans. We provide this regular summary so you can do just that, as well as compare the performance of your plan with the major UK and US stock markets. We use these market comparators because they measure the performance of the biggest companies on each side of the Atlantic, and because most of our customers have a significant portion of their pensions invested in shares of UK-based and US-based companies. As the majority of our plans are diversified, most of our customers are invested in a mixture of geographies and asset classes.

As of the end of Q1 2021, UK and US stock markets returned 5% and 6% respectively. This is significantly higher than performance for the same period last year when both stock markets were down (-24% and -^_basic_rate respectively), and offers hope that our economies are gradually recovering.

Against this backdrop, PensionBee plans have performed similarly to the main stock markets. The growth of most PensionBee plans reflects economic recovery, whilst also mitigating shocks through diversification. Most plans for those aged 50+ have recorded flat performance (+/- 1%) and continue to preserve savings for those who are close to retirement through relatively low exposure to company shares, or none at all.

It’s good to remember that your pension is a long-term investment and to keep that in mind when considering short-term performance. For example, in the five years to the end of 2020, our plans have experienced average annual growth ranging from 5% to 1^{_personal_allowance_rate}, which should put our customers in good stead to build healthy retirement nest eggs. PensionBee is proud to offer long-term financial products in partnership with the world’s largest money managers: BlackRock, State Street Global Advisors, HSBC, and Legal & General.

Remember that past performance is not a guide to future performance and this blog has solely been prepared for informational purposes and not with the intent to influence future investment decisions. As with all investments capital is at risk.

Savers under 50

Sources: Yahoo Finance, Investing.com, Morningstar, and Direct from the money managers. The performance of BlackRock plans are reported as net figures, and all others are gross figures. Past performance is not an indicator of future performance. Capital at risk. These tables do not take account of any fees that may be levied for a particular investment. Full fact sheets are available here: www.pensionbee.com/uk/plans. Plan performance may vary slightly from published factsheets due to timing differences and other negligible methodological differences. ^^Equity content refers to the amount of exposure each plan has to global stock markets and other listed risk-on assets, such as property.

Savers over 50

Sources: Yahoo Finance, Investing.com, Morningstar and Direct from the money managers. The performance of BlackRock plans are reported as net figures, and all others are gross figures. Past performance is not an indicator of future performance. Capital at risk. These tables do not take account of any fees that may be levied for a particular investment. Full fact sheets are available here: www.pensionbee.com/uk/plans. Plan performance may vary slightly from published factsheets due to timing differences and other negligible methodological differences. ^^Equity content refers to the amount of exposure each plan has to global stock markets and other listed risk-on assets, such as property.

An important note of caution: It’s impossible to forecast what will happen from quarter to quarter, and past performance should never be used to predict future performance.

For our customers who are already in retirement and are perhaps thinking about withdrawing all of their pension, we hope that you will take comfort in the range of plans we have on offer. You may want to consider only drawing down what you need and keeping a close eye on the markets. Our Investment Pathway guide can help you select a plan based on your personal retirement aims.

We will continue to keep you regularly updated on what’s happening with your savings and if you have questions about your plan’s performance, or anything else, you’re welcome to get in touch with your BeeKeeper.

This is part of our quarterly plan performance series. Check out the next quarter’s summary here: How PensionBee’s plans are performing in 2021 (as at Q2).

Have a question? Get in touch!

You can check out our Plans page to learn how your money is invested in different assets and locations. You can always send comments and questions to our team via engagement@pensionbee.com.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

Rigid retirement dates are a thing of the past for growing numbers of workers who are choosing to enter into new - and enjoyable - work patterns as they age.

Planning for a century of life is becoming the norm. In 2043 in the UK, ^{_scot_intermediate_rate} of newborn boys and 26% of girls are expected to live to at least 100, according to the Office for National Statistics. Today women aged 65 can expect to live another 22 years, and 20 years for men.

Based on life expectancy trends, retiring at 55 and living to, say, 85, means paying for a 30 year retirement, requiring a large pot or very modest expectations. Increasingly those approaching traditional retirement age from formal employment are taking a different route.

Over-60s are the fastest growing self-employed age group, according to figures from the Association of Independent Professionals and the Self-Employed (IPSE), jumping 73% since 2008 and by 11% in 2019 alone.

Over-60s are the fastest growing self-employed age group

Several factors are driving the surge of older entrepreneurs, from longevity, to the increase in women’s State Pension age, and the need to supplement small pensions. The government’s most recent data (from 2019/18) puts pensioners’ average income at £320 a week, after direct taxes and housing costs. This is around £16,640 a year. Clearly some people would want, or need, more to live on than that.

But money is not the only motivation for retirees seeking a second, or even third chapter to their work lives. IPSE also did a survey of the motivations for people becoming entrepreneurs and their experiences of it. It found happiness in self-employment increased with age, with ^{_state_pension_age}% of 16-29 year olds reporting high net happiness but 84% of the 60-plus group.

Those in the 60-plus age bracket were also much less likely to say that self-employment had been more challenging than expected, at only 34%. While a third of freelancers said being self-employed made it hard to find time for social and leisure activities, only 23% of those in the 60-plus age bracket had that trouble.

These survey results are from January - evidence suggests freelancers and the self-employed have been among the hardest hit economically by coronavirus, and the least likely to benefit from government support schemes. But the pre-crisis sentiment among older self-employed people shows strong appetite among retirees to pursue meaningful work in a more flexible retirement.

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Coronavirus is creating shifts in employment. Between the first and second quarter of the year, 6% of people changed occupation, according to the ONS, a figure expected to rise once the government’s furlough scheme ends in October. Over half (53%) were men, 27% were aged 35 to 49 years - and almost a third were aged 50 to 64 years.

For workers who can adapt to the changing times, opportunities are emerging as temporary staff become increasingly important to businesses trying to recover from the effects of coronavirus. The Recruitment and Employment Confederation found in July employers’ hiring intentions for agency staff in the next three months hit the highest level since the end of 2019.

Short-term work may especially suit semi-retired people who already have their basic income needs met by pensions, or who have been hit by lower investment income due to stock market falls earlier this year and are seeking a bit of a top up.

Short-term work may especially suit semi-retired people who already have their basic income needs met by pensions

It’s worth doing a bit of financial planning before switching from a more traditional, pension income-only retirement, to one with more earning options, as it could push you into a higher tax bracket, or limit the amount you can save into your pension.

Once a pension saver who is still working starts taking retirement income, the money purchase annual allowance (MPAA) kicks in. It means you can only contribute £4,000 per year to your pension (including tax relief). Contributions above this limit are subject to income tax, making it hard to rebuild your pension pot.

Coronavirus is making many of us reconsider the sort of life we want to lead, and face new employment and income realities. Freelance and self-employed earnings can be volatile, but offer opportunities to continue pension contributions to gain valuable tax-relief, and to build up a rainy day fund (of three to six months’ expenditure), to dip into when stock markets are falling and it makes sense to pause pension withdrawals.

Risk warning
This information should not be regarded as financial advice.

This article was last updated on 19/08/2024

Since 2018 it’s been a legal requirement for all employers to offer a workplace pension, ensuring that no one retires without one. But many people continue to invest in property too, hoping it will boost their retirement income. In this article, we explore the differences between investing in pensions and property to find out which approach might be suitable for you.

Investing in a pension

Pensions are specifically designed to support you through retirement. Unless you have the largely discontinued defined benefit pension (where an employer would typically pay into it for you), both you and your employer will pay money into your pension while you’re working. Your pension provider then invests that money into a range of stocks and shares that they expect to increase in value over time.

By the time you retire, your pension should be large enough to live off for several decades. Unlike the State Pension, which currently requires you to wait until you’re ^{_state_pension_age} (rising to ^{_pension_age_from_2028} in 2028), you can usually access your workplace pension from as early as 55 (rising to 57 in 2028).

Pensions are one of the most tax-efficient ways to save; not only will the government provide tax relief so that you only need to pay in 80p per £1 added to your pension, but you can withdraw ^{_corporation_tax} of it tax-free when you retire. As a result, pension providers are currently looking after £2 trillion worth of investments on behalf of savers in the UK.

The more you put into a pension, the more it will be worth when you retire. But with so many other ways to invest your money, it’s worth understanding the benefits and the downsides of putting all your savings into a pension.

Pension retirement options:

• take some of it as cash and leave the rest invested;
• take ^{_corporation_tax} of it as cash and buy an annuity with the rest;
• take smaller amounts as and when you need it;
• take all of it as cash (and face a high tax bill); and
• a mix of these options.

Financial benefits of a pension:

• your employer will pay in at least 3% of your qualifying earnings;
• the government will provide tax relief of at least ^_basic_rate;
• you can take out ^{_corporation_tax} of it tax-free when you retire;
• if you start investing when you’re young, you’ll benefit from compound interest;
• there are lots of ways to spend your pension when you retire (see list above); and
• you can move your money between different pension providers if you find a more suitable or competitive plan.

Financial downsides of a pension:

❌ you can’t access it before 55 (rising to 57 in 2028) without a hefty tax penalty;

❌ you can’t pay in more than ^{_annual_allowance} per tax year (2024/25) or 10^{_personal_allowance_rate} of your salary, whichever comes first. This could change in future;

❌ there’s no guarantee your pension will grow, and it could even fall in value;

❌ if your pension doesn’t keep up with inflation, you may find yourself unable to spend as much as you expected when you reach retirement; and

❌ some pension providers charge hefty fees, which can significantly erode growth.

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Investing in property

Property has long been seen as an attractive investment proposition in the UK. In the late 1990s and early 2000s in particular, house prices grew at such a rapid rate that many homeowners saw their property double or even triple in value over barely a decade.

But house prices don’t always go up. The 2008 recession saw the average home fall in value by 16% in just ten months, and prices still haven’t recovered in some areas of the UK.

That said, property does tend to increase in value over the long term. And it can earn extra income if you rent it out. So if you’re looking at property to boost your future retirement income, how can you go about it?

Buying your own property

Although many people might not primarily consider it a financial investment, buying a home can significantly increase your wealth over the long term.

For example, a home bought for £84,600 in January 2000 would sell for an average of £278,588 in January 2024. That’s a rise of nearly £196,000 in 24 years (averaging 9.8% growth per year).

If you’re fortunate enough to see your home rise in value by the time you retire, you might be able to turn that value into income in several ways.

Owned property retirement options:

• [downsize to a smaller homeuk/downsizing) and live off the difference;
• release equity for a lump ](/sum of cash;
• rent out a spare room to earn monthly income; and
• buy an annuity with the money freed up for a guaranteed income.

It’s important to note that while these options might sound attractive in theory, they all carry risk. For instance, there’s no guarantee that downsizing will free up enough cash to live on, or that you’ll even want to rent out a spare room by the time you retire. Equity release in particular can be risky, since it involves using the equity in your home to take out a large loan that needs to be paid back.

You can learn more about using your property to fund your retirement, equity release, home reversions and lifetime mortgage in our property and retirement video series.

Financial benefits of buying a home:

• your wealth increases if your home increases in value;
• an increase in value might allow you to release equity to spend in retirement;
• you’re not ‘throwing money away’ on rent;
• you’ll typically pay less per month on a mortgage than renting the same property;
• you could receive financial incentives if you’re a first time buyer; and
• your home can be passed on when you die.

Financial downsides of buying a home:

❌ you’ll probably need to take out a mortgage and pay interest;

❌ you’ll need to put down a large sum of money upfront as a deposit;

❌ if you fall behind on your mortgage, you could lose your home;

❌ you’ll be responsible for maintenance costs;

❌ you’ll lose some financial flexibility as your money’s tied up in your home; and

❌ your home might not significantly rise in value, and could even fall in value.

Buying property to rent out (buy-to-let)

House prices have grown to such an extent over the last few decades, that more people than ever have turned to renting their homes. In 2000 about 1^{_personal_allowance_rate} of homes were privately rented by 2023 this had grown to over 18% about 4.6 million people. The number of landlords currently stands at 2.82 million in 2024.

Between 2005 and 2015, the number of rented properties in the UK almost doubled to around 5 million. And along with rising rents, the number of landlords grew with them, to almost 3 million.

But in 2017 new tax rules came into force that made renting property less lucrative. And in the years since, more than 220,000 landlords have left the buy-to-let game.

So is investing in buy-to-let property an attractive option for retirement?

Buy-to-let retirement options:

• live off the rental income;
• sell one or more properties and live off the cash;
• downsize one or more properties and live off the cash;
• release equity in one or more properties and live off the cash; and
• buy an annuity with the money freed up for a guaranteed income.

Just like with a residential property, none of these options are risk-free. There’s no guarantee rental income will be stable, since you may experience gaps between tenants. And there’s also no guarantee the property won’t fall in value, causing other problems. Finally, should you own a portfolio of multiple properties when you die, anyone you leave it to might have a hefty inheritance tax bill to pay.

Financial benefits of buy-to-let:

• you’ll have a steady stream of income;
• rent could increase if there’s a rise in demand;
• your wealth increases if your property increases in value;
• an increase in value could allow you to afford buying more property (known as leveraging); and
• you’ll get ‘free’ income once your mortgage is paid off.

Financial downsides of buy-to-let:

❌ you’ll need a larger deposit than a residential mortgage (typically ^{_corporation_tax});

❌ you’ll have to pay interest on a mortgage;

❌ if you fall behind on your mortgage, you could lose your property;

❌ you’ll need to pay 3% stamp duty on each purchase;

❌ you may not be able to find a tenant, causing a break in income;

❌ you’re responsible for maintenance and renovations;

❌ you’ll lose some financial flexibility as your money’s tied up in property; and

❌ your property might not significantly rise in value, and could even fall in value.

Investing in property funds

You don’t need to buy your own property to own a share of the housing market. Instead, you could invest your money in a share of a property fund. And lots of people do; property funds held a whopping £2.5 trillion in 2018.

The type of investments property funds focus on can really vary; some invest in UK residential property, some in overseas commercial property, some in student accommodation, and some even build their own property.

Property funds present an attractive option for those who either aren’t able or don’t want to provide the large upfront deposit on a property, prefer to invest little and often, or simply want to spread their investment risk across a larger number of properties. But just like any other form of property investment, property funds have their pros and cons.

Property fund retirement options:

• live off the dividend income;
• sell some or all of your shares and live off the cash; or
• buy an annuity with the money freed up for a guaranteed income.

Bear in mind that you’ll need to invest a lot of money into a property fund if you’re to receive big enough dividends to live on. And while property has historically proved a solid long-term investment, there’s no guarantee that this trend will continue.

Financial benefits of property funds:

• you can invest as much or as little as you like on a regular basis;
• your money’s spread across multiple properties, reducing the risk of individual properties losing their value;
• you could gain access to international property markets;
• there are tax benefits if you invest through a SIPP or ISA; and
• your cash flow won’t be impacted by sudden unexpected property costs.

Financial downsides of property funds:

❌ value of shares can fall as well as rise with the property market;

❌ buying and selling shares could be a slow process, limiting access to your money;

❌ funds may prevent withdrawals if too many people try to withdraw at once;

❌ dividends can rise and fall with tenant occupancy rates;

❌ some funds invest in a niche property market (eg. student accommodation) which could be particularly affected by specific market events; and

❌ you’ll need to pay management fees.

Which is right for you?

Here’s a summary of the main differences between investing in pensions and property.

As we’ve seen, there are plenty of benefits and downsides to each of these options. And while one approach may work for some people, it may not be suitable for others.

There’s no doubt that pensions offer great tax incentives, while property funds spread out the risk of buying individual property. But the right choice will come down to your personal circumstances and goals.

If you’d like to know more about pensions and how PensionBee could help you, get in touch using the live-chat button on the right or call our UK team on 020 3457 8444.

Risk warning
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

The best time to start a pension is yesterday! The second best time is today. It’s definitely not too late to begin pension saving at 35, 45, or even 55, but it does become trickier to build up a pot to sustain you in retirement, so you’ll have to pull out all the stops using the tips and tricks below.

Starting a pension at 35

At 35 you still have more than three decades before you reach the traditional retirement of around ^{_pension_age_from_2028}. Plenty of time to get things sorted for a comfortable later life, and benefit as much as possible from the power of compound interest on your savings.

Changes in the minimum age to receive the State Pension mean you won’t be eligible for it until at least 68. Based on its present value, £230.85 per week, it would be worth £10,600 a year.

Changes in the minimum age to receive the State Pension mean you won’t be eligible for it until at least 68

By age ^{_pension_age_from_2028} you could also look forward to a workplace pension pot of £101,337, based on average assumptions*. That may sound a lot, but over a 20 year retirement that’s about £5,050 a year.

If you could squirrel away an extra £100 a month on top of your Auto-Enrolment minimum contributions to your workplace pension, you could boost your pot to £150,738, bumping up your annual income to £7,536 for 20 years. Adding the State Pension to that could give you £16,000 a year.

If that still doesn’t seem like much (it isn’t), now is the time to put as much into your pension as possible. The earlier you do the longer it has to grow, and investment returns to do the heavy lifting of making your pot bigger.

Starting a pension at 45

By now, in most cases early retirement (say at age 55) will be off the table, so you have around 20 years to build up a pension pot. By age ^{_pension_age_from_2028} you will be eligible for the State Pension. On top of that, based on the same average assumptions, you can expect a workplace pension pot of £63,653.

You’ll probably need to think about how to increase that as much as possible in the time you have before retirement, perhaps working full-time for longer, or continuing to do some work while semi-retired.

You could also increase your monthly contributions now. This lets you benefit from tax relief, and employer contributions. Saving an extra £100 a month into your workplace pension could give you a pot of £94,684, more than £30,000 bigger. That would put you on track for an annual income, with the State Pension, over 20 years of around £13,800.

Aiming to pay off your mortgage and other loans before retirement is a good way to ensure this modest amount doesn’t have to stretch too far.

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Starting a pension at 55

Don’t worry, all hope is not lost even now, there is still plenty you can do to help yourself.

Starting a workplace pension at 55 and retiring at ^{_pension_age_from_2028} only gives your cash 12 years to grow, so you could expect a final pot of £31,732. Over a 20 year retirement that is an income of just under £1,600 a year. On top of that you will have around £9,100 a year from the State Pension (at current levels), giving an annual total of £10,700.

Contributing an extra £100 a month to your workplace pension could bump your pot up to £47,201 by age ^{_pension_age_from_2028}, for an overall yearly total income of £11,460. But to make up for lost years due to starting a pension in your 50s you would need, if possible, to make much larger additional contributions.

Working beyond age ^{_pension_age_from_2028} may be a necessity based on your expected retirement income, to help you to increase your pot. That may mean a change of career, but you would continue to receive valuable “free money” from employer contributions to your pension. Over-60s are also the fastest growing age group among the self-employed, which could provide a boost to your income.

To reach 55 and never have saved into a pension is quite rare, so it’s worth taking some time to hunt through old paperwork and use the government’s Pension Tracing Service, to see if you have old pensions from previous jobs you’ve forgotten about.

These could be very valuable; more employers offered so-called ‘gold-plated’ defined benefit, or final salary, pensions in the past than they do today, and you may find your lost pot is one of those.

Sign up today, and be pension confident. With PensionBee you can easily combine your old pensions together into one simple online plan. You can see your current pot size, set up regular or one-off contributions, and use our pension calculator to check whether you’re on track to meet your retirement goals.

Sources

Figures calculated by LCP, independent pension consultancy, based on the following assumptions:

• Contribution rates based on automatic enrolment levels (5% employee, 3% employer) on an income of £30,420 (2019 median full-time wage in UK), increasing 2.5% annually
• Annual pension charge of 0.75%
• Investment growth of 5% per year
• Inflation 2.5% per year

Risk warning: As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

A lot changes when you become self-employed; the responsibilities, the satisfaction, and especially the finances. If you haven’t been self-employed before, you may find setting up and managing your self-employed finances much easier than you thought.

These days, being self-employed is more popular than ever (there are five million self-employed people in the UK alone!) and plenty of financial services exist to support them. Here are a few ways to help you manage your finances...

1. Register as self-employed

If you work for yourself, you’ll need to register as self-employed. This is partly a tax requirement as you’ll need to start reporting your income through Self Assessment, but it will also open up access to other services like self-employed bank accounts and mortgages.

It doesn’t take long, and you can register by phone or online using the Gov.uk website.

2. Open a self-employed bank account

A business bank account helps you keep your business finances and your personal finances separate, and should make it easier to complete your tax return and to provide evidence of your business transactions to HMRC if necessary.

Unlike most personal bank accounts, you’ll have to pay a fee for your business bank account (usually £5-10 per month). However, most accounts offer an initial fee-free period of one or two years. Bear in mind that any transaction that’s considered ‘non-standard’ will incur an extra charge, even within the fee-free period.

Most of the big banks offer business bank accounts, but if you’re looking for a slick app-based experience to help manage your money you may want to consider:

• Tide
• Starling
• Revolut
• Monzo

3. Keep business records

If you’ve set up a limited company, there are lots of rules governing the company and accounting records you need to keep. These include things like company spending, assets, debts and stock. As a result, many people choose to hire an accountant to help comply with these rules.

If you’re set up as a sole trader, it’s a little simpler. You’ll need to keep records of your business income and expenditure, so that you can give the numbers to HMRC when you complete your tax return.

In either case, you’ll want to keep records of all your transactions including:

• receipts
• bank statements
• invoices

Managing money effectively is key. It may be a good idea to create a spreadsheet that you update regularly with your income and outgoings, and there are also lots of apps for self-employed workers that can help you save and organise your receipts and other paperwork. Online accountancy platforms like FreeAgent and Xero are two popular options in the UK, and can simplify your bookkeeping greatly for a fee.

4. Consider self-employed business insurance

Business insurance isn’t a legal requirement for most self-employed workers, although if you take on any staff then you’re usually required to have employers’ liability insurance. You may also find that your client contracts and/or your professional bodies require you to have certain types of business insurance in place.

There are two main types of business insurance:

• Public liability insurance can pay compensation if someone sues you for injury or damage (if someone trips over in your shop, for example).
• Professional indemnity insurance can pay compensation if your client sues you for negligence or making a mistake (accidentally breaching confidentiality), for example.

Even if your client contracts and professional bodies don’t require you to have insurance, it may be a good idea anyway, as compensation claims can be very high.

Business insurance counts as an ‘allowable expense’, so the cost can be deducted when you’re working out your taxable income. Online insurance brokers like Simply Business can help you find a range of covers, from a range of insurers, but it can be worth exploring more specialist alternatives like Digital Risks if your needs are very specific.

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5. Complete a self-employment tax return

When you’re self-employed, you’re responsible for filing a Self Assessment tax return and paying any tax owed to HMRC.

When you complete your tax return you’ll need to declare your business turnover and your ‘allowable expenses’, which are the costs that you can deduct from your turnover to calculate your taxable profit. You may want to get help from an accountant.

Because you won’t need to pay taxes until 31 January following the previous tax year, it’s good practice to put money aside throughout the year. This will make sure you’re not short on cash when it comes to paying your tax bill.

Check out our 10 top tips for filing your tax return.

6. Consider a self-employed mortgage

Buying a home when you’re self-employed can be more difficult than for those in regular employment, but it’s become easier in recent years.

When applying for a mortgage, your lender may ask you to show:

• two years of financial accounts
• two years of HMRC tax calculations (or SA302)
• signed client contracts
• a track record of regular work
• a good credit history

The lender will use these to calculate your average income and decide how much they’re prepared to lend you. You’ll also need to pass an affordability check, so your everyday outgoings will also be scrutinised to check that you can afford the mortgage repayments.

Since getting a mortgage when you’re self-employed can be tricky, you may want to use a mortgage broker. There are plenty of highly-rated fee-free brokers to choose from, and some of them are even available online, like Trussle.

7. Set up a self-employed pension

Financial planning for retirement is just as easy when you’re self-employed. As a self-employed worker, you can pay into your own self employed pension with PensionBee. If you have previous pensions, you can combine these into a single easy-to-manage plan.

Although you won’t get employer contributions if you’re self-employed, you’ll still benefit from generous tax relief - the government adds £20 for every £80 you put in your pension if you’re a basic rate taxpayer, and you can claim back further tax relief through your tax return if you’re paying tax at a higher or additional rate.

If you run a limited company, you may be able to make employer contributions into your pension, which also comes with tax benefits.

For more information, read private pensions for the self-employed.

Risk warning
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

This article was last updated on 01/08/2023

In 2022, the UK became the most expensive country for childcare costs and according to research from 2023, parents now shell out just under £8,000, on average, in childcare costs per year. This has risen from 2022, when the average cost of sending one child to nursery was £7,212 per year.

As a result some parents (often mums) may take a break from their careers to care for the kids, and this can have huge financial repercussions - especially when it comes to pension saving.

The outcome could be a retirement shortfall in later life, but there are a number of things you can do over the coming years to prevent that. Here’s our top tips for stay at home mums looking to build a better retirement.

Reduce childcare costs where you can

One of the best ways to increase your future pension is to pay more into it. Of course, this is heavily dependent on how much money you’ve got left over after paying all your other necessary costs. So why not do what you can to reduce those hefty childcare costs? Thankfully, you’ve got several options here.

Firstly, not all types of childcare costs the same. For example, hiring a childminder instead of sending your child to a nursery is often cheaper as they’re more flexible and don’t have the same overheads as most nurseries.

Another way to reduce costs is to claim any benefits you’re entitled to, including tax-free childcare. This is a government scheme that contributes up to ^{_tax_free_childcare} per child a year (2023/24) towards childcare costs for working parents. As with all schemes, you’ll need to meet eligibility criteria. If your child’s two years old and you receive other benefits like Income Support or Universal Credit, you may be entitled to up to 15 hours a week of free childcare. While this only applies to children who’re a certain age, it could help you pay a little more into a pension. More information on this scheme can be found on the gov.uk website.

Protect your State Pension

The full State Pension entitles you to £10,600 per year (2023/24), and while this alone isn’t likely to be enough to live on, it’s a good foundation for your retirement. However, to get the maximum amount, you’ll need to have paid National Insurance contributions for at least 35 years.

National Insurance contributions are something you probably associate with working, but did you know that your years spent away from the workplace can still qualify towards your State Pension? You just need to have registered for Child Benefit.

Child Benefit‘s a payment you can claim if you’re looking after a child under 16, or under 20 if they’re in education or training - although if you or your partner’s individual income’s above £50,000, you may have to pay a tax charge. If this is the case and you don’t want to claim Child Benefit as a result, you can still fill in the form as this protects your National Insurance credits. Foster carers can do this too by filling in a different form. You’ll get National Insurance credits when you claim Child Benefit until your youngest child’s 12 years old.

So if you’re wondering whether stay-at-home mums get a State Pension, the answer should be yes, so long as you take the necessary steps outlined above.

Look for any lost pension pots

It’s estimated that as much as £26.6 billion has been ‘lost’ in pension pots which people have forgotten about, so think back to where you’ve worked in the past, start contacting old employers or pension providers and use the government’s free pension tracing service if you need to. PensionBee customer, mum and CEO of Mrs Mummypenny; Lynn Beattie, was shocked to find around £40,000 in old workplace pensions.

My Pension Mess has been Fixed thanks to PensionBee. https://t.co/SzsWWIYloN Check out my latest post from Mrs Mummypenny pic.twitter.com/WuLMwAqgjW

— Lynn Beattie (@MrsMummypennyUK) June 13, 2019

So why not track down your old pensions too? You might be surprised at what you discover. It’ll also help you when it comes to the next step.

Set a retirement savings goal

Once you know what you have, it’s time to start planning ahead. According to the Pensions and Lifetime Savings Association (PLSA), the average retired couple needs £19,900 per year (£12,800 if you’re a single person) to achieve a minimum standard of living in retirement. This amount would cover all of their basic costs, leaving a little room for leisure activities, clothing and holidays in the UK.

For the moderate living standard, the PLSA predicted that a couple would need £34,000 (£23,300 for a single person). In addition to the minimum, this living standard would provide a little more financial security and flexibility for example holidays in Europe and more money for eating out and leisure activities.

To achieve this level, a couple sharing costs with each in receipt of the full new State Pension would need to accumulate a retirement pot of £121,000 each, based on an annuity rate of £6,200 per ^{_high_income_child_benefit}.

The highest living standard is comfortable for which a couple would need £54,500 per year (£37,300 for a single person), which would provide further financial security and more money for luxuries, for example beauty treatments and trips to the theatre.

To achieve this level, a couple sharing costs with each in receipt of the full new State Pension would need to accumulate a retirement pot of £328,000 each, based on an annuity rate of £6,200 per ^{_high_income_child_benefit}.

‍

Combine and contribute whenever you can

You might not need to start from scratch, if you’ve got lots of old pension pots, you might already be well on your way. Try using our pension calculator to see how you can reach your desired pension pot.

Something else worth considering is bringing your old pensions together, into one simple personal plan (just like PensionBee). This gives you the freedom to contribute with no minimum amounts, and potentially save money on the fees you’d spend if you were managing multiple pots. Remarkably, some providers still impose all kinds of costs on dormant pensions so you may be able to avoid those too.

When it comes to contributing, try to see where you can cut costs, as you might be surprised at what some small sacrifices bring. Plus, if you come across money - some inheritance, perhaps - consider putting some of that towards your pension. Explore what kind of work you can do from home around the kids, too, as you might be surprised what’s possible.

If you’re struggling to keep up your pension contributions while you’re on parental leave and your partner’s still working, ask them to contribute for you.

Above all else, don’t panic - just save what you can - as anything’s better than nothing. Plus, most UK taxpayers will usually benefit from tax relief on their pension contributions which means that the government effectively adds money to your pension pot. So for every £100 you contribute, you’ll receive another £25 from the taxman.

What could the government be doing to help?

Improving childcare

The UK has some of the highest childcare costs in the Organisation for Economic Co-operation and Development (OECD). On average, full-time childcare for a child under two costs over £14,000 and many families say that they cannot afford it without going into debt or family help. Addressing extortionate childcare costs is necessary to help parents, especially women, to save for a happy retirement.

Help for part-time working parents

Auto-Enrolment has helped many workers around the UK save for their retirement. However the minimum income threshold is ^{_money_purchase_annual_allowance}. Any parents earning less than that, because they’re working less hours while also taking care of their children, won’t benefit from being automatically enrolled into their workplace scheme. However, if you earn over ^{_lower_earnings} and ask to join, your employer must make contributions on your behalf. Greater awareness and transparency around Auto-Enrolment’s crucial to ensure individuals don’t miss out.

Greater focus on financial literacy

65% of women and 53% of men are reported to find financial jargon hard to understand. As a result, products like pensions and investments are seen as inaccessible, and women are disproportionately impacted. A greater focus on financial education is needed, whether that’s resources like financial literacy guides or drop-in sessions.

Listen to episode 19 of The Pension Confident Podcast. Our guests discuss preparing to have kids, childcare costs and more. You can also read the full transcript.

Risk warning The information in this article should not be regarded as financial advice.

Pension poverty is the bleak reality for nearly two million pensioners in the UK, scraping by on less than 6^{_personal_allowance_rate} of the UK average income.

If you’re dreaming of retirement as the chance to relax and recharge, check how far your own pension savings can stretch.

Limited State Pension

The State Pension only provides a limited safety net. For those who reached retirement age before 6 April 2016, the basic State Pension is just £6,981 a year. Even the full new basic State Pension is only £9,110 a year, a fraction of national average household income at around £26,800 a year.

Without extra income from work or private pensions, many senior citizens face harsh choices between heating and eating, unable to afford the warm clothing and energy bills to cope with winter weather. Others are forced to continue working, just to make ends meet.

Pensioners hit hardest

Poverty hits harder for women, single people, those who rent and ethnic minorities, according to research by the Joseph Rowntree Foundation. Lower pay while working, career gaps and part-time roles all restrict pension saving, and eat away at retirement income. Hundreds of thousands of women born in the 1950s suffered financial hardship when their State Pension age was pushed up further and faster than expected. Life events such as illness, redundancy, bereavement and relationship breakdown can also derail retirement plans.

Poverty isn’t only driven by low income. Higher costs, whether for rent, social care or disabled support, can leave little over.

Pressure from the pandemic

Recently, COVID-19 has ripped up many people’s retirement plans, forcing older workers to delay retirement or retire earlier than expected. Others have stopped or shrunk pension contributions, in the face of job losses or lower wages while on furlough.

Learning from my mother’s pension prospects

Personally, I was prompted to start paying into a pension by my mother’s dire warnings about her own pension. Like millions of other women, my mother doesn’t get a full State Pension. She paid ‘married women’s stamp’ while working, an option for working wives until 1977. It meant paying lower National Insurance Contributions in exchange for a lower State Pension, based on her husband’s contributions.

The whole system was arranged around the idea of male breadwinners building up pension savings which would then support their wives. Sadly, this doesn’t work so well for the divorced, widowed, separated or single. My mother also cashed in her teachers’ pension to cover expenses early in her married life, stopped working after my sister and I were born, and then became self-employed – with no employer to pay into a pension for her.

Her pension worries made me keen to save enough to actually enjoy retirement. I have done charity fundraising challenges in the past, feeding myself for £1 a day or living on the same rations as a Syrian refugee in a camp. No-one should have to live on so little, whether retired or not. Thanks to my mother’s advice, I started paying into a pension early, topped up my contributions before maternity leave, and am well on track to avoid retirement poverty.

How to avoid pension poverty

Keen to enjoy a more comfortable retirement? Follow these top tips:

Start by checking your State Pension forecast online at gov.uk. You can see what you’re entitled to now, how much you should get by retirement age and when you should get it. You can also check your National Insurance record, with the chance to top up any gaps in the last six years.

Then check forecasts for any workplace or private pensions, whether by digging out paperwork or logging into your accounts online. If you have lost track of pensions from previous employers, try the Pension Tracing Service. Once you’ve got a sense of your current retirement savings, you can plug the numbers into a pension calculator to see what kind of income you might receive.

As a rule of thumb, experts suggest aiming for two thirds of your current income. This assumes you’ll save on commuting costs and housing costs, after paying off your mortgage, in later life. If your pension savings are well on track for the kind of lifestyle you’d like, congratulations! If not, consider how to boost your pension pot.

Prioritise pension saving early

The earlier you start paying into a pension, the more time your money has to grow. The magic of compounding means that even small sums paid in during your early 20s can make a massive difference by the time you reach retirement. Equally, opting out of a workplace pension, or delaying pension payments while self-employed, can hit your pension pot hard.

If you’re part of a couple and take a career break to raise children, work out if it’s possible to budget for pensions for you both. Even non-taxpayers can stash up to £2,880 a year in a pension, and see it topped up to £3,600 with tax relief.

Review your pension planning as you approach retirement

If your pension savings are in dire straits closer to retirement, you face two choices: save more or delay retirement. The good news is that if you plough more into your pension, you can take advantage of the free money added in tax relief and any employer contributions.

If you’ve been auto-enrolled in a workplace pension scheme, the minimum contribution is set at 8% of your earnings: 4% from you, 1% tax relief and 3% from your employer. If you can afford to make additional voluntary contributions to your work pension, or pay into a separate private pension, it will boost your retirement prospects. Sacrifices now can help secure your longer term financial future.

Checking charges for your pension and its investments, and switching to lower cost alternatives, mean you will hang on to more of your hard-earned cash. You may be lucky enough to benefit from inheritance or property prices, if you sell the family home to move somewhere smaller. However, unlike regular pension contributions, you can’t rely on such windfalls to lift you out of poverty in retirement.

Earn extra during retirement

If money’s tight after retirement, check you’re claiming all the benefits you’re entitled. More than a million pensioner households are missing out on Pension Credit, according to the DWP. The average amount of Pension Credit unclaimed is £39 a week according to Age UK, which adds up to more than ^{_tax_free_childcare} a year. Around 1 in 7 of those who should be claiming Housing Benefit to help with rent are also missing out.

Pension Credit doesn’t just provide extra income – it also unlocks support with housing, health and more recently free TV licences for over 75s. Depending on your circumstances, other benefits, such as attendance allowance, carer’s allowance, disability living allowance and personal independence payments, may also be relevant. AgeUK offers a benefits calculator and a free advice line on 0800 055 6112.

Women on low State Pensions should also check if they’re due a top up based on their husband’s contributions. If you were born before 6 April 1953, are married, divorced or widowed, and get less than £80 a week in State Pension, you may be entitled to more, particularly if your husband, ex-husband or late husband had a full basic State Pension.

Faith Archer is a personal finance journalist and money blogger at Much More With Less. Check out Faith and Lynn’s videos about spending during lockdown and after lockdown.

Throughout 2020 most investors will have experienced some degree of market volatility first hand, no matter how their pension savings are invested. At the end of Q1 and Q2 we published summaries of how our plans performed in the wake of coronavirus. Our customers have found the comparison to global stock markets especially helpful, and many have requested an update following the end of Q3. So we’re pleased to present the year-to-date performance of the PensionBee plans when compared to UK and US stock markets.

We’ve chosen these benchmarks because our plans are diversified and most of our customers are exposed to movements in the UK stock market and also in the US stock market. In addition, most of our customers will have exposure to other assets, including bonds.

As the economic effects of the coronavirus pandemic continue to take hold with the UK entering the largest recession on record, the UK stock market has fallen by -^_basic_rate over 2020. On the other hand, the US stock market has been gradually rising since the initial slump when the pandemic first struck global markets towards the end of March. Overall, it has grown by 6% since the beginning of the year. Against this backdrop, our plans were resilient - most of our plans are now flat for the year, substantially outperforming the UK stock market owing to the benefits of diversification.

As always, it’s also important to compare this year’s performance to the long-term returns of the market, where most pensions are invested. Indeed, pension savers who’ve been investing for the last 30 years, as many pension savers ultimately will be, enjoyed cumulative returns of over 30^{_personal_allowance_rate} for the period (comparison of the UK stock market from 1989-2019). This shows us that even with periods of short-term volatility, such as the 2008 recession, long-term savers can create healthy retirement nest eggs, and that’s what pensions are all about. PensionBee has been proud to offer robust long-term financial products in partnership with the world’s largest money managers, BlackRock, State Street Global Advisors, HSBC and Legal & General.

Remember that past performance is not a guide to future performance and this blog has solely been prepared for informational purposes and not with the intent to influence future investment decisions. As with all investments capital is at risk.

Savers under 50

Sources: Yahoo Finance, Investing.com and direct from the money managers. ^Price taken on the last day of the quarter. Past performance is not an indicator of future performance. Capital at risk. These tables do not take account of any fees that may be levied for a particular investment. Full fact sheets are available here: www.pensionbee.com/uk/plans. Plan performance may vary slightly from published factsheets due to timing differences and other negligible methodological differences. ^^Equity content refers to the amount of exposure each plan has to global stock markets and other listed risk-on assets, such as property.

All of our plans designed for customers under 50 years old have outperformed the average return of the UK stock market as a result of their emphasis on diversification. Most plans are invested in a range of assets such as shares, cash, property and bonds, usually across several different regions. This means that when one type of investment or market dipped, others rose. This quarter, the US stock market outperformed the UK market, and our customers benefited from this. US technology stocks have been significant beneficiaries of the transition to a digital economy as a result of the pandemic, and the Shariah Plan, which has substantial holdings in Microsoft, Apple, Facebook and Google, outperformed its peers.

While it’s been difficult for savers under 50 to see their pension balances fluctuating over the year, it’s important to remember that short-term fluctuations, including severe ones, are entirely to be expected and in fact contribute to the ability to generate healthy longer-term returns. Indeed, younger savers are unlikely to be negatively impacted by the current downturn when they come to retire as the greater the decline in their plan’s value, the more likely they are to benefit from the future recovery of the stock market.

Savers over 50

Sources: Yahoo Finance, Investing.com and direct from the money managers. ^Price taken on the last day of the quarter. Past performance is not an indicator of future performance. Capital at risk. These tables do not take account of any fees that may be levied for a particular investment. Full fact sheets are available here: www.pensionbee.com/uk/plans. Plan performance may vary slightly from published factsheets due to timing differences and other negligible methodological differences. ^^Equity content refers to the amount of exposure each plan has to global stock markets and other listed risk-on assets, such as property.

Early last year we introduced two new pension plans specially designed for those nearing retirement, offering our over 50 customers more options to safeguard their savings ahead of drawdown. The 4Plus Plan targets an annualised return of 4% over a 5-year period, which is consistent with commonly recommended annual drawdown rates of around 4%.

Savers in the Preserve Plan continued to be well-insulated from market volatility, as the principal aim of the plan is to reduce risk, and shelter savings from the impact of short-term market fluctuations for customers intending to make substantial withdrawals in the near future. By making short-term investments into creditworthy companies and safer assets such as fixed income, the Preserve Plan has remained stable over 2020, resulting in neither gains nor losses for investors.

Those customers over 50 who are in our default plan, Tailored, are seeing positive returns, substantially higher than those of the UK stock market. That’s because the plan automatically derisks investments as an investor ages, moving their savings to safer assets and taking a more conservative approach to investing as they near retirement. For those expecting to retire within the next few years, the Tailored Plan (Vintage 2019 - 2021) has reported a small gain (3%) for the year.

For our customers who are already in retirement and are perhaps thinking about withdrawing all of their pension as a result of the downturn, we hope that you will take comfort in the range of plans we have on offer, and balance your short-term desire to safeguard your savings with the risks of not keeping your savings invested in the longer-term. With that in mind, you may want to consider only drawing down what you need and keeping a close eye on the markets. This is particularly important now given the uncertain economic backdrop, as the exact moment a saver accesses their pension can have a big impact on their ultimate retirement income. Withdrawing money you don’t intend to spend straight away during a downturn could risk depleting your pot substantially.

Over the coming months we’ll continue to keep you regularly updated on what’s happening with your savings and if you have questions about your plan’s performance, or anything else, you’re welcome to get in touch with your BeeKeeper.

An important note of caution: It’s always impossible to forecast what will happen from quarter to quarter, and past performance should never be used to predict future performance. However, it is reasonable to prepare ourselves for further falls as coronavirus has continued to have an impact on the global economy. When markets fall, it’s tempting to consider withdrawing your money to protect it or moving it to lower risk investments, however, there’s a risk that investments could be sold at a loss and you may miss out on any increases in value in the future when markets recover.

On the contrary, when markets are not doing well, there are more opportunities for investors. If you make regular contributions to your pension, you may wish to increase your contributions as you’ll be able to invest at lower prices than before the market downturn.

This is part of our quarterly plan performance series. Check out the next quarter’s summary here: How PensionBee’s plans performed in 2020 (as at Q4).

Have a question? Get in touch!

You can check out our Plans page to learn how your money is invested in different assets and locations. You can always send comments and questions to our team via engagement@pensionbee.com.

Risk warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.

Finance isn’t sexy. But that doesn’t mean it should be ignored, particularly if you’re in a committed relationship. In fact, successfully managing your finances can elevate your relationship to new levels. So how should couples manage their money? Here are some good money management tips to get you started.

Be open about your finances

All good relationships are built on openness and communication. Being open avoids misunderstandings, false expectations and unwarranted suspicions. That’s why the simple act of talking about money with your partner is important, no matter how scary or uncomfortable it might initially seem.

If it’s your first time talking about money - perhaps, like many people, you grew up in a family where it was rarely spoken about - you might want to ease into it slowly. You could start by comparing how much you spend on coffee or take away each month, before sharing your salary and moving onto more serious matters such as student loans or other debts.

Timing and your environment are important factors to consider when talking about money management. So make sure you’re in a private space where you won’t be interrupted and can express yourselves freely. If you don’t have a private space at home, going out for a walk could be a good alternative. You’ll also want to make sure you’re both in a good headspace, so consider talking during a weekend brunch rather than a late evening after a stressful day at work.

Finally, bear in mind that very few people are completely happy about their finances. We all make decisions we later question, particularly when we’re young. So remember to show each other the respect and empathy you both deserve.

Decide how you want to manage your money together

There’s no right or wrong way to manage your money. Every person and situation is unique and requires its own approach. But there are some common approaches you might want to discuss with your partner before making a decision.

Keep everything separate

Having your own bank account and paying for your share of the bills is a perfectly fine approach to managing your money. You’ll split the bills the way you see fit and whatever’s left is yours to spend how you wish.

Bear in mind that you’ll need to be extra communicative with this approach because your finances will be effectively hidden from your partner. If you’ve agreed to stick to a budget - for example, if you’re saving for a house deposit - you’ll both need to trust each other to stick to it.

Combine your finances

Having your incomes paid into a joint bank account can be an extremely effective way of managing your money. Because you’ve both got visibility over the account’s income and outgoings, there should be no confusion about how your money’s being spent (and who’s spending it).

This is a particularly good option for those who prefer to treat their incomes as one, regardless of who might earn more. But it’s important to note that having access to each other’s money does require a high level of trust, and shouldn’t be considered lightly.

A middle-ground might be to open a joint bank account that’s only used to pay regular bills like rent, with each person paying in their share each month. The rest of their personal money would be theirs to spend as they wish.

Sharing responsibilities proportionately

If one of you earns considerably more than the other, or one of you isn’t earning at all - if you stay at home to raise children, for example - you might agree for that person to cover the majority or all of the household outgoings. In some circumstances, the main earner may want to provide the other with an allowance - whether to cover regular outgoings like groceries, or a personal allowance to spend as they wish.

This approach might be simpler or more complicated to manage, depending on the exact setup. But in either case, you’ll want to make sure you’re both completely comfortable with this arrangement so that there’s no confusion or resentment when the bills are paid each month.

Calculate your outgoings

To get a grip of your finances you first need to understand how much you’re already spending. This will help you identify where you might be overspending and whether you’ve money left over to put towards savings.

Calculating your outgoings is a simple thing to do together. Simply write down how much you each spend on the following:

• Rent / mortgage
• Council tax
• Gas
• Electricity
• Water & sewage
• Internet
• Mobile phone
• Groceries
• Household items
• Car / transport
• Insurance
• Loan repayments
• Other

If you do find anything you were previously unaware of - for example, if your partner’s paying off a large loan each month - you’ll now be able to decide whether to tackle it together. In this scenario, one of you might offer to cover some of the bills or agree to spend less money on going out together.

Set your goals and create a budget

Now that you know how much you’re spending, you can decide how to spend the money you’ve got left. The first part is to define your goals. These might include setting money aside for:

• a deposit on a home
• a wedding
• a baby
• a holiday
• an emergency fund

You’ll need to have a conversation about the type of home or wedding or holiday you want since these costs can vary significantly. And if you’re planning on having a child, you’ll want to consider the impact it will have on your daily finances and whether one or both of you will be taking time out from work to look after it.

Once you’ve defined your goals, you can get to creating a budget. There are several ways to manage your savings - from putting the money aside in a separate bank account, to storing it in a ‘savings pot’ (a feature of some banking providers), or locking it away in a long-term savings account. If you don’t already have an emergency fund, you might want to make sure you can access your money quickly if you need it.

Retirement money management tips

It might feel like a long way off, but at some point you’ll need to rely on a pension to provide an income. Being a retired couple can have its advantages - couples spend far less per person in retirement, according to a Which? survey. But even so, you’ll both want to start saving as early as possible to make sure you’ve built up an adequate pension pot by the time you retire.

PensionBee allows you to keep track of your pension savings using a secure easy-to-use app, so you can adjust your contributions over time to reach your retirement saving goals.

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Save money where you can

There are plenty of ways you’ll be saving money in a relationship without even thinking about it. Per person, it generally works out cheaper to rent, pay utilities, shop for groceries, and even book a holiday. In fact, people in a relationship generally pay £21 less per week than singletons according to the Office for National Statistics.

But there are other ways you could save money too. Consider these smart money management tips:

• Cover your belongings using the same contents insurance plan
• Insure your cars with the same provider to get a multi-car discount
• Share a joint health insurance plan
• Share a Netflix, Disney+ or Amazon Prime account
• Cook for each other rather than order in
• Enjoy free activities like hiking instead of paying for attractions
• Buy second-hand furniture instead of buying new

Maintain regular financial checkups

Once you’re comfortable talking about your finances, and you’ve set up your finances in a way you’re both happy with, you’ll be well on your way to a successful financial partnership. But it doesn’t end there.

To keep things on track, you’ll want to check in with one another every so often. You could set time aside once a week or fortnight to go through your budget over dinner, or you could even make an event of it and go out for a meal or a couple of drinks.

Remember, no matter which approach you take to managing your finances as a couple, there are few better tips to managing money than simply keeping the conversation going.

Risk warning
The information in this article should not be regarded as financial advice.

This article was last updated on 20/07/2023

We all want to get on top of our finances and the older we get, the better we tend to be at understanding our money. By the time you hit your 30s, you should have reached financial independence. This means you’re in charge of your own money. You’re not getting bailed out by parents any more, and you’ve got better awareness and knowledge of exactly what your personal finances are like – and what you want them to look like.

So exactly how should your finances look by the time you reach your late 30s? Here’s what you should be aiming for.

Consider the cost of having kids

Data published in 2019 by the ONS (Office for National Statistics) shows the average age of first-time mothers is around 28.9. But growing a family is early to mid-30s territory, with the age of all mums (not just first-timers) typically 30.6 and dads 33.6. It’s a completely personal journey, but your late 20s and early 30s are a good time to start putting down financial groundwork, if you’re ready to have a baby.

We’ve put together a couple of guides to starting and growing your family, whilst making smart financial choices. Take a look at How to financially plan for a baby to get you on the right path, plus 9 free things to do in the summer holidays for lots of fun things to do without dipping into your long-term savings pot.

Prioritise saving for a deposit

It’s around this time that dreams of buying your own home start becoming more concrete, especially if you’ve been chipping away at the deposit already.

But when you look at the amount needed to put down a deposit, it can be tempting to push that plan to one side, focusing on a shorter-term goal like a new car, or serious holiday. The key is to make the deposit your financial focus, and not be dispirited by how much there is to save.

Investigate the savings options which are going to help you grow your money fastest, and whether any government help might bring you closer to your dream house, flat, or somewhere in-between.

For example, could a Lifetime ISA boost your savings? Open to savers aged 18-39, it lets you tuck away up to £4,000 a year for your first home (or retirement), and adds extra cash (up to ^{_basic_rate_personal_savings_allowance}) a year too.

Cook your own meals

Sound obvious? The problem is, in your 30s, you’re busier than ever before. Whether it’s work, family life, travelling, all three or something else, it’s easy to get to the end of the day and go for a meal-deal, or opt for your favourite delivery service.

A 2019 KPMG survey found that on average, we’re spending £451 each, every year on takeaway meals, as an average (London was much higher, at a whopping £709 average personal spend). All of this accounts for around 34 meals a year, which works out at just under three splurges every week. So even dropping the habit down to once every two weeks could cut this outgoing by a significant chunk, if you feel up to it.

With thousands of meals-on-a-budget resources available – from websites and apps to Instagram accounts and YouTube videos – prepping your own food and freezing or reusing any leftovers can be varied, much more nutritious and dare-we-say-it, fun. Or at least very satisfying, when you know you’ve got a freezer full of chilli to use up this Friday night.

Our go-to favourites are the BBC Food website, Jamie Oliver’s YouTube channel and anything involving Jack Monroe, who famously created a budget-friendly food movement after struggling to feed herself and her son on £10 a week. It’s inspirational, tasty stuff.

Pay off your credit cards and student loans

Starting with high-interest debt, you should have paid off most of your credit cards and any student loans by your late 30s.

Paying off your debt helps to improve your credit score for big purchases like a home or a wedding. Plus, it helps you to regain control of your money so you can focus on other things.

If debt is something you struggle with, there are plenty of online resources available to help you put together a plan. No matter how old you are, it’s always possible to be debt-free.

And avoid unnecessary debt

But everyone has a bit of debt, don’t they? Or rather, ‘What is ‘unnecessary debt?’ Having a long list of non-essential, badly-used credit cards is a big one, as are unpaid (and penalty-accruing) bills, or parking tickets you’ve lost track of (make use of the pay-early-pay-less opportunity on these, which can run into thousands of pounds, and even a county court judgement).

Debt you just don’t need can also include loans, especially if you’ve gone for one but haven’t looked into alternative financing arrangements first. Go through your finances, all of your statements, supplier paperwork and unopened post, and set yourself goals for paying off and cancelling the debt you don’t need.

Overpay the mortgage (if you can)

If good savings rates and interest savings are realistic, but repayment penalties are also on the cards, does it make sense to overpay your mortgage?

There’s the potential to chip away at your home-buying debt, so you’ll pay it off quicker, in theory. But many lenders do include early repayment fees in their terms, especially if pay off above a certain amount (usually 1^{_personal_allowance_rate}). So check your terms, speak to your lender and add this good habit to your toolbox, whilst being sensible about fees.

Contribute to your pension

You probably already know that saving regularly is a healthy habit. But did you know that your retirement savings should amount to roughly twice your annual salary by the time you reach 35?

Whether it’s your 20s or 30s, it’s never too early to start thinking about retirement. Start saving while you’re younger, and you’re more likely to have enough in your pension pot to retire comfortably.

Savings not adding up to twice your salary? Don’t panic. There’s still time to catch up. Consider making larger pension contributions each month, or top up more often between your monthly contributions.

If you’re not sure exactly where all your pensions are (you may have a couple from previous jobs), sign up with PensionBee to get things sorted out today. One of our BeeKeepers will help you combine everything into an easy-to-use dashboard, making staying on track simple.

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Set up an emergency fund

Alongside saving for your retirement, you should also be saving into an emergency fund. Disasters and unexpected bills happen to everyone, as we’ve seen recently during the coronavirus outbreak. Emergency funds help you to prepare for those moments.

It’s a lot easier than you think to set up an emergency fund, and even saving a little each month can go a long way towards an emergency.

Remember, part of being financially independent means keeping on top of saving, with multiple funds for different purposes. Having separate funds for retirement, emergencies and other goals means you’re less likely to use each fund for anything other than its purpose.

Make a few investments

By your late 30s, you may have some long-term investments on the go.

Just like with your pension, investing early can give your money the chance to grow over time. You could use this money in retirement or spend it on a wedding, holiday, or your kids.

In your late 30s, you should already have set up a solid pension and an emergency fund. This puts you in a great position to consider investments. You should do plenty of research before investing so that you know you’re setting up a fund that aligns with your investment goals.

Make a will

Setting up your will is an important task for anyone over 18 so by the time you’re in your late 30s, it’s pretty overdue.

Writing your will is usually quite simple and it makes sure that your money, property, and belongings go where you want after you die.

You should update your will after any major life changes, like getting married, having kids or buying a home. So if it’s been a while since you looked over your will, now’s a great time to make any changes.

Know your finance goals and priorities

Ultimately, you’ll have enough experience by your late 30s to know exactly what your financial goals and priorities are. From savings and retirement goals to your spending habits, you’ll be familiar enough with your money to know what you need from it.

Are you saving for a house (or a holiday home) or do you mostly save for your kids and their future? How do you want to spend your retirement? Are you going to be travelling a lot or do you need to prepare to put down roots?

When you know how you want to use your money, you can move forward with an action plan that ensures you get the most out of your finances. It’s always a good time to take control of your money and gain financial independence, no matter how old you are.

Risk warning The information in this article should not be regarded as financial advice.

With uncertainty everywhere, the nights drawing in and Christmas cheer hanging in the balance, pensioners and those saving for retirement are at least able to enjoy a bit of good news following recent pension announcements.

State Pension

State pensioners are set for a 2.5% pay rise next April. At five times the 0.5% which the cost of goods and services (inflation) is going up, it’s a meaningful increase in pensioners’ spending power.

The boost is due to the ‘triple lock’ rule which means the State Pension rises every year by the increase in earnings, inflation or 2.5%, whichever is higher.

Under the increase from next April, a single pensioner currently on the new full payment of £175.20 would get an extra £4.40 per week. An older single pensioner on the old basic State Pension of £134.25 would get an extra £3.35 per week.

However the bumper pay rise has added weight to calls to scrap the triple lock as unfair when inflation is so low and workers wages fell by 1% this year.

Lifetime allowance

There was a modest bump up for those still in the pension saving stage too. The pensions lifetime allowance is set to increase by 0.5% next April, in line with inflation.

This means the amount a saver can tuck away into their pension with the benefit of tax relief - and without incurring a hefty penalty of up to 55% - will rise by £5,800 to £1,078,900.

If they save the maximum into their nest egg, most savers will be entitled to an extra £1,450 tax-free cash as a result.

While pension savings of over £1 million is a brilliant achievement, bear in mind that according to the Money Helper it would buy a healthy 65-year-old an annuity paying less than £28,000 a year – below the average UK wage.

Simpler annual statements

More good news for pension savers, the government has announced plans to make standardised, simpler annual statements mandatory for all pension providers.

To help savers understand their pensions better, see how far off they are from their retirement goals, and make the most of the tax advantages of pension saving, these often confusing statements are being cut to just two easy to read pages.

In 2019 PensionBee became the first pension provider to adopt Simpler Annual Statements, providing customers with a short and clear overview of their pension, and in 2020 became the first provider to display charges in pounds and pence.

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Worry for self-employed

A more worrying development is happening among the self-employed; 3.5 million are not saving in a private pension, new research suggests.

Twenty years ago 48% of the self-employed saved into a pension. Now it’s just 16%, even as their numbers have increased to 15% of the workforce. With COVID-19 hitting self-employed incomes hard their pension provision could get worse. But there are options.

Low-cost self-invested personal pensions (SIPPs) offer an easy way to save what you can when you can, with contributions automatically benefitting from basic-rate tax relief up front. Higher rate taxpayers can claim extra tax relief from HMRC.

For those aged 18 to 39 there is also the Lifetime ISA. You can save up to £4,000 a year and the government adds 25% – equal to basic-rate pension tax relief – up to £1,000. The money is yours tax-free from age 60 or earlier for a deposit for a first home. Other early withdrawals face a charge of 20% for 2020/21 and 25% for 2021/22.

In these tough times it’s important to see the positives like rising State Pension incomes, while recognising you may need to adapt to get the retirement you want, especially if you’re not paying into a pension already.

Retirement presents a big opportunity to make a significant change to your life. For some, moving to another part of the country - either for a lifestyle change, or to live somewhere more affordable - is the perfect way to begin their next chapter in life.

If you’re looking to shake things up by moving to a new city or town, here are a few tips to help you on your way.

Did you know? 🤔 The UK is home to more than 12 million people over 65. And it’s a growing group - by 2030 they’re estimated to represent 22% of the population (up from 18% today).

What makes an area good to retire?

House prices

Cities can be expensive, in part because that’s where all the jobs are. But when you’re retired, you don’t need to worry about that - you can live almost anywhere!

Own a home in London? You’ll be spoilt for choice if a move to the south coast sounds appealing. Eastbourne and Bournemouth are just two popular retirement locations to choose from.

Own a home in Edinburgh? You could move a short way inland to the historic and more affordable town of Stirling.

Equally, you could also downsize to a smaller property within the same city or town where you currently live if you find yourself in a home that’s larger than you need.

Did you know? 🤔 Swapping the average three-bedroom London home (£1,128,398) for the equivalent home in Bournemouth (£3^{_state_pension_age},319) would free up a whopping £792,079 to spend in retirement.

Access to healthcare

It’s no secret that our health begins to decline as we get older. Unfortunately, none of us know what or when we might need the services of our NHS. So living near a doctor’s surgery or a hospital may be worth the consideration.

You might never need it, but knowing it’s there might give you the peace of mind and comfort to be more active in your retirement.

Transport links

Many retirees move away from cities to smaller towns where transport networks aren’t usually as widespread or frequent. If you don’t have a car - or don’t see yourself driving into your later years - it’s definitely worth considering whether having easy access to public transport is important to you.

Living on a main line train route might also be important if you plan on travelling longer distances - either to see friends or relatives, or making that occasional trip to the big city to visit a museum or to see a performance.

Local amenities

Living within a few minutes’ walk to local shops or attractions is a valid consideration in retirement. Not only is it incredibly convenient to be able to pop out for that forgotten jar of pasta sauce when you need it, but high streets bring communities together because you’ll inevitably bump into someone you know along the way.

Parks and green space

Going for a gentle walk in nature - or a brisk one, depending on your style - has proven health benefits. Plus, what’s nicer than slowing down to watch the birds and squirrels go about their day?

Parks can also provide a fun and easy way of keeping the grandchildren entertained when they come to visit.

Walkability

Getting out and about and staying active is as important for our mental health as it is for our physical health. It stops us from becoming isolated and sedentary, and opens up a world of opportunity to engage in new hobbies and social activities.

Living in a walkable city where pavements are well looked after, local parks and green spaces are accessible on foot, and local shops are within reach can really make a difference.

Did you know? 🤔 In a 2017 survey of 2,000 people, Living Streets found Edinburgh to be the UK’s most walkable city. Sheffield and London brought in second and third place, respectively.

Safety

Living in a safe community is understandably high up on many people’s lists when considering where to retire. You can find out how safe an area is by checking the UK Police website.

Many places have a neighbourhood watch programme, where communities look out for one another by being alert to threats and reporting any unusual behaviour.

Top places to retire in the UK in 2020

We don’t have data to show exactly where retirees are moving to, but the Office Of National Statistics (ONS) conducted a 2019 survey that showed the percentage of people over 65 by local authority.

UK authorities with highest percentage of over 65s

UK authorities with lowest percentage of over 65s

But don’t up-sticks for Norfolk just yet! While many retirees might live in those locations, these figures don’t necessarily reflect the quality of life you’ll enjoy retiring there. For that, we have to look at other research.

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Best cities to retire

In 2019, research revealed the best places to retire by comparing the house prices, crime rates, local amenities, and other aspects of towns across the UK. Here’s how they fared.

1. Plymouth

With an affordable average house price of just over £170,000, a low crime rate, and plenty of entertainment venues, the traditional south-coast port town of Plymouth came top of the list.

2. Southampton

Second on the list was another south-coast port town, this time situated on the edge of the South Downs. Property might be slightly more expensive in Southampton, averaging £208,000, but it has many more cafes and bars to relax in and enjoy.

3. Nottingham

The highest-ranking inland city is Nottingham. With some of the most affordable housing on the list (averaging £141,412), the city made famous for its tales of Robin Hood also boasts plenty of cafes and bars.

The rest of the best retirement towns

4. Cardiff
5. Derby
6. Liverpool
7. Leicester
8. Bristol
9. Wolverhampton
10. Manchester
11. Dudley
12. Stoke-On-trent
13. Glasgow
14. Brighton And Hove
15. Newcastle Upon Tyne
16. Hull
17. Edinburgh
18. Coventry
19. Walsall
20. Birmingham
21. Sunderland
22. Swansea
23. Sheffield
24. Rotherham
25. Bradford
26. Leeds
27. Wakefield
28. Doncaster
29. Milton Keynes
30. London

Cheapest places to retire

Where is the cheapest place to retire? Every town and city has its expensive areas and affordable areas. So you may find affordable places to retire even in the most unlikely of places.

For example, if you’re set on moving to the warmer climes of the south coast (which tends to be more expensive on average than other popular retirement destinations), you may find a more affordable spot slightly further inland.

Did you know? 🤔 The Sussex seaside town of Bognor Regis enjoyed 1,921 hours of sunshine in 2019. That’s more than any other town in the UK!

Here are a few other things to consider when searching for an affordable place to retire.

Avoid tourist hot-spots

Tourism is a great way of bringing money to our towns, but the increased demand for accommodation and entertainment tends to push up property prices and attract more expensive restaurants and other attractions to the area.

Take Brighton, for example. It’s one of the most popular destinations in the South East, and with an average house price of £363,000 it’s one of the most expensive. But a quick search on Rightmove found several lovely two-bedroom homes for sale in the nearby suburb of Woodingdean for under £300,000.

Avoid commuter towns

You’d be forgiven for expecting that towns surrounding a city would be more affordable locations to settle down into retirement. This is often true, but not always.

Commuter towns are popular with workers who prefer to live in greener and more specious environments, while travelling to work in the city by train. Again, this demand can push up house prices and lead to the introduction of more expensive amenities like restaurants and bars that cater for an affluent working crowd.

Avoid areas around high-performing schools

According to research from mortgage broker Trussle, house prices rise by an average of £180,000 when they’re nearby an ‘outstanding’ school. So if your children are all grown up, and your grandchildren don’t live nearby, consider giving these areas a miss.

Go west (or north)

Typically, it’s the South East where you’ll find the most expensive towns. So head further west to the popular retirement destinations of Devon and Cornwall, or north towards the midlands and Yorkshire, and you’ll be sure to find more affordable places to settle down and enjoy your retirement.

At PensionBee, we’ve been investigating the ‘pension gap’ between men and women since 2016. Our own customer data (captured below) shows that pensions belonging to women contain around ^_higher_rate less than those belonging to men, and that the gap only widens with age.

There are lots of factors that contribute to the gender pension gap, not least the gender pay gap where women are systemically paid less than men for equal work. It’s our vision to live in a world where everyone can look forward to a happy retirement in the form of financial freedom, good health and social inclusion. Addressing financial inequality wherever it exists is a key part of this.

The gender pay gap

The gender pay gap measures the difference in hourly earnings between men and women, excluding overtime. According to the Office for National Statistics, the gender pay gap among full-time employees was 7.4% as of April 2020. When comparing all employees, including those in part-time work, the gap increases to 15.5%.

The gap changes depending on how you slice the data, but one of the most stark differences is when comparing the gender pay gap by age: women under 40 years of age earn about the same as men for full-time work, but women over 40 earn up to 13% less.

Gender pay gap for full-time median gross hourly earnings excluding overtime. Source: ONS

The pension pay gap

The pension pay gap measures the difference in pension pot size between men and women. Our own analysis based on PensionBee customer data, shows that women have, on average, over £9,000 less in their pension pots than men - a gap of ^_higher_rate.

Gender pension gap UK

Just like the gender pay gap, the gender pension gap varies by age too and gets wider in the run up to retirement. By the time savers reach their 50s, men have a pot that’s almost twice the size as an average woman’s.

Source: PensionBee, December 2020. Based on ^{_state_pension_age},244 customer records.

Romi, our CEO, has called for greater awareness of the inequality facing female savers - not just from their own employers and the government, but also from the wider pensions industry. Speaking on the findings she commented:

“Our data paints a worrying picture for female savers. Closing the pay gap will take time, making it all the more important for us women to take control of our pension savings now. The pensions industry has left many women isolated from finance and we’re determined to change that at PensionBee. Better saving should be simple and accessible for everyone.”

Jemima Olchawski, Head of Policy and Insight at the UK’s leading charity campaigning for gender equality and women’s rights, the Fawcett Society, added:

“Right across their lives women earn less and so have less to save for their pensions. What’s more, whilst auto-enrolment has been an important step forward, women are still more likely to be excluded from the benefits. All this leaves women at risk of poverty and economic dependence in their retirement. It’s time to speed up the pace of change, close the gender pay gap and banish the dated stereotypes that mean women continue to be most likely to pay the price of care.”

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What’s causing the gap?

Understanding the reasons behind both the gender pay gap and the gender pension gap is complex, however there are some obvious elements at play.

Less pay equals less savings

It’s no surprise that if women earn less, they will have less money available to pay into a pension. Unfortunately inequality in pay doesn’t just affect women in the here and now, it also has serious implications for their futures. When women are paid less in their working lives, they will be paid less in retirement too.

Contributions to pensions at work are normally based on a percentage of salary. If you’re a low earner you’ll pay less into your pension and see smaller sums added by your employer and by tax relief. The good news about pensions is that for every £100 a basic rate taxpayer puts into a pension, the taxman will add an extra £25 on top.

If you’ve been auto-enrolled into a workplace pension, from April 2019 you’ll have to pay at least 4% of qualifying earnings into a pension (plus 1% tax relief), topped up by at least 3% from your employer. Higher and additional rate taxpayers can claim extra relief through their Self-Assessment tax returns.

Women are more likely to take time out

Data from the Institute for Fiscal Studies shows that around the age that many women take time out of work to care for children, the gender pay gap widens and so does the gender pension gap.

It makes sense that the two things are connected, because if you have less take-home pay, then you have less to put into your pension pot. Many women pause their pension contributions while on maternity leave and we know that when women return to work, they make up 3/4 of the part-time workforce in the UK. The combination of lower salaries and long career gaps, with little or no pension saving for years, are a massive disadvantage.

Of course, this is linked to wider socio-economic trends: women are still much more likely to stay home with children and care for elderly relatives. The uptake of shared parental leave, which means women give some of their maternity leave allowance to their partner, has been poor, perhaps largely due to the way the legislation is being implemented. Many organisations offer higher maternity pay than shared parental pay, and a minority of men say that the concept is encouraged by their employer.

Returning to work full-time is tough

Once you’ve been out of the workforce, it’s an uphill struggle to get back in, for many reasons. Those who’ve had a career break may be seen as less skilled and out-of-date. As a society we don’t see child-rearing as something that develops transferable skills, and many women (and men) who have taken time out to care for children find that they’ve slid right down to the bottom of the job market.

In many ways, we’re still living in a world that’s set up for one parent working full-time to “bring home the bacon”, while the other parent stays home to bring up the kids. And the parent staying at home is still more likely to be the mother. Childcare costs, inflexible workplaces, and unfavourable attitudes towards returners all implicitly enforce this, even while the explicit narrative tells us that both parents should be able to work and women aren’t at a disadvantage. Plus, anyone whose promotion prospects are limited by career breaks or part-time roles will then miss out on increased salaries and increased pension payments.

Figures show that UK childcare costs have been rising for years, while average wages have been falling. With 50 hours of childcare per week costing an average of £11,000 per year, for many families it just doesn’t add up for both parents to work full-time.

Employers are afraid to embrace greater flexibility

Women returning to work therefore often seek something that’s more flexible or part-time, but this limits job options, pushing many into low-paid work and hindering career progression. As women get older, the gender pay gap (and the gender pension gap) grows. Perhaps one of the biggest changes that would begin to close the gap would be a move towards more flexible and progressive workplaces.

Imagine if more workplaces saw flexible hours, home-working and job-sharing as things that could benefit all employees, creating a happier and more productive workforce, rather than perceiving them simply as the awkward and career-limiting requirements of parents. If this attitudinal and cultural shift took place - which may become more likely due to the coronavirus pandemic - it would mean that parents weren’t so restricted when it came to looking for a job that fitted around their childcare arrangements.

Another option would be for employers to help solve the affordable childcare problem by installing creches at workplaces, or incentivising mothers to return to their jobs in other ways. And crucially, once there, providing adequate support and policies to help women catch-up on time spent out of the workforce.

The financial system isn’t designed for women

Our financial systems continue to be set up in a way that systematically disadvantages women. According to BritainThinks, the financial services industry, while not actively ignoring women, presents products in a way that excludes them, with one woman remarking that “the more you go into the bank, the more detailed and complicated the products get, the further away from consumer research you get and the more older men are in charge of products.”

Financial services is an industry heavily dominated by men, and therefore more often than not men are in charge of designing the products and marketing them. Until women are more widely represented at all levels, progress in making financial products more accessible will be slow.

Tips to boost your pension savings and narrow the gender pension gap

Gender equality is essential for economies and communities to thrive, and the government and business leaders must be pressured to introduce stricter measures to address the gender pay gap urgently. At the same time there are some steps women can take to grow their retirement savings to help narrow the gender pension gap:

1. Don’t turn down free money

When you pay into a workplace pension, your employer has to add money on your behalf, plus you get tax relief on top. Don’t opt out of a workplace pension because retirement seems a lifetime away – it’s like turning down a pay rise.

2. Start saving early

Time is the magic weapon when it comes to pension saving, as those early payments have longer to benefit from compound interest. Even if you can’t afford to save a lot, it’s important that you get started.

3. Consider making lump-sum contributions

Boring Money founder Holly Mackay frequently cites a surprising statistic: only 1^{_personal_allowance_rate} of British women have a Stocks & Shares ISA, compared to 17% of men. According to the Money Advice Service, we should be keeping about three months’ essential outgoings in a bank account and more than six months’ essential outgoings is considered too much. If you think you’re sitting on spare cash - or you receive a cash injection unexpectedly - consider bumping up your pension payments.

Have a look at our short guide on what you could do with your savings, from paying down debt to topping up your pension.

4. Check out pension arrangements during maternity leave

The contributions you make to your pension during maternity leave will be based on your actual earnings during this period which may be lower than your usual payments. That means your contribution level may fall over the duration of your maternity leave, if you don’t increase your payments. Some employers, however, will continue paying into your workplace pension while you’re on maternity leave, even after maternity pay stops, so it’s worth investigating your workplace policy.

5. Register for Child Benefit after having children

Even if you’re not entitled to payments because your partner earns over ^{_annual_allowance} a year, it’s worth registering anyway. Otherwise, you could miss out on National Insurance Credits which go towards your State Pension entitlement.

6. Build pension saving into the family budget

If you’re part of a couple, and one person takes time out for caring responsibilities, plan how to fund their pension from the family income. Even if you’re not working, you can pay £2,880 a year into a pension and the government will top it up to £3,600 (thanks to tax relief).

7. Make the most of your pension money

Track down pension pots from previous employers and any private pensions, then check where your money’s invested and how much it costs. If you have several years to retirement you may choose to explore investments that take more risk, such as company shares, in the hope of generating higher returns in the long-term.

8. Consider switching to save money

Research from Gocompare.com has found that men are significantly more likely than women to search for better deals when it comes to insurance, energy, broadband and bank accounts - 61% of men have switched in the last year, compared to 53% of women. There are usually always savings to be made, so it’s worth doing an audit of your monthly outgoings and seeing where you can switch and save.

How PensionBee is doing things differently

At PensionBee we’re doing things differently. Our aim is to make pensions simple by giving consumers increased visibility and control of their retirement savings. We’re passionate about promoting diversity and inclusion within our team culture and are committed to achieving wider representation and equality in the pensions industry.

Half of our team consists of women and around a third self-identify as a minority ethnicity. We want our team to be reflective of our customer base, and for our team to be the rule, rather than the exception in the industry.

Risk warning: As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.