Improving Your Retirement Fund: 5 Easy Tips

18 August 2021

For some people, retirement is something to fear because they worry about not having enough money accumulated. For others, creating a nest egg for their retirement and adding progressively to it is a satisfying process.

For both types of people though, the odds for their retirement fund can be improved by following some easy tips. Read on to find out more.

Get Clarity around what Your Pensions are Invested In

Surveys have often discovered that employees aren’t clear about the funds they’ve selected for a company pension. Some only discover far too late that they opted to have 100 percent of their contributions in a low-risk fund that was mostly sitting in cash equivalents.

As you can imagine, investing in money-market type strategies likely will struggle in vain to keep up with inflation and won’t appreciate in real (above inflation) terms.

The lesson here is whatever pension assets you currently have to go towards your eventual retirement, get clarity on them. Even if you originally made the fund selection from a basic list, double-check what is offered now. See if your original selection – can you remember what it was? – still makes sense for your retirement goals.

Are there better options today?

Examine the Returns on Your Pension Funds

Take a look at the fund sheets from the various pension providers to see how your investments have been doing lately. They usually have downloadable Adobe PDF files to view the information on a bigger display.

Compare these returns to a reasonable investment benchmark. See how they did and compare it to the market as a whole. For instance, if you were hoping for a 50:50 split between stocks and bonds, then compare returns to the relevant equity and bond indices. Many fact sheets will already do that for you, so look out for it.

How are the pension funds doing compared to the benchmark? If they’re majorly underperforming it, that’s a good reason to either move into a different pension fund or to consider pension consolidation.

Assess If You Should Consolidate Pensions to One Provider

If you’re already dissatisfied with your pension results, then consider the complexity involved too.

When multiple pensions are too difficult to keep track of and manage, it’s another reason to look into pension consolidation. Moving from multiple pension pots across several providers to a single pension pot removes the headache from the process.

You can also use a pension calculator to get a better sense of how your pension is doing. If you spent ages trying to log into multiple pension provider websites and figuring it all out though, the question about pension consolidation almost answers itself really.

What’s needed is to move toward a simpler pension pot with a handful of well-selected investment options. It avoids confusion, allows you to keep up with what’s happening for your retirement, and gives you peace of mind.

Thankfully, with Willis Owen’s One Plan it’s possible to do just that and consolidating multiple pension pots stops you from having to manage multiple pensions with different providers.

Investment Costs: A Good Reason to Consolidate? They Should Be

Some pensions are more expensive than others. While many investment costs have become more reasonable of late, that’s not always the case.

When investing over decades, not just a handful of years, differences in investment fees are magnified. So, if your collection of pension providers charges a pretty penny now, then it’s certainly worth seeing if consolidating pension pots will not only introduce simplicity but cut fees down to size too.

Find New Ways to Contribute More

No one can tell you what the returns will be. That’s why investments come with the warning about your capital and point out that returns aren’t fixed in stone.

With pension planning, a smaller pension pot means either retiring later than you’d like or needing to survive on less. Neither option is an ideal situation for you.

This is why we suggest finding new ways to contribute more to the pension while you can. If you choose the right pension provider, you’ll earn more on a larger pension pot. Whilst returns aren’t guaranteed, grab what’s under your control. The amount of your monthly contributions certainly is so don’t let the opportunity pass you by.

Ultimately, pension planning is a long-term process that’s difficult to get right. It’s like playing a game of darts where the dartboard is 20 miles away and you’re trying to hit the bullseye. Similarly, retirement investing often spans over 20 years in the hopes of having enough money to retire on once you get there. It too requires a steady hand. Don’t let lower investment returns ruin your plans. Dig deep to invest more and assure your retirement.

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