Considering making changes to your pension?

Making financial decisions in an ever-changing environment is tough; we get it. Especially when you’re struggling to think about anything beyond the next few months, let alone saving for the future.

There’s an increasing number of people reducing or stopping their workplace pension contributions. But, while this might be a quick fix and give you some short-term relief, it could end up costing you more in the long run.  It’s not just your own money you’ll be missing out on; your employer’s contribution often stops as well.

If this is something you are seriously considering, it’s crucial that you weigh up the long-term consequences carefully. Don’t be fooled into thinking that skipping a few years of pension contributions won’t make a difference. Over time, those contributions can build up into a significant amount of savings, which all goes to helping you live the retirement dream you want and deserve.

The key benefit of workplace pensions, and pensions in general, is that they allow you to save for retirement while reducing tax burdens. Contributions to a pension mean money that would have gone to the Government as taxes go straight to your retirement savings instead, enabling you to retain more for your future. So, you get to keep more of your money for your future.

The other temptation, if you’re 55+ and trying to deal with higher expenses, is to dig in your pension savings. But this too, has its pitfalls. Withdrawing from your pension early could reduce the overall amount of money you have available for your retirement. You could also end up with a big tax bill since any withdrawals above your tax-free limit and personal allowance are taxed. So, you could potentially lose a chunk of your pension’s value to taxes, and there’s no way to get that money back.

Pensions are designed to support you throughout your retirement years, which could last for decades after you stop working. By reducing your contribution or using up your pension savings too quickly, you might face financial struggles later in life when you truly need them.

So, the moral of this story is that your pension shouldn’t be the first place you look to reduce and/or access savings.

There’s always a better way.

• To get even more valuable information about pensions, we invite you to attend our upcoming Pension & Retirement Workshop on Tuesday 28th November 6pm-7pm. Here, our pension specialists will share their expert tips to help make your retirement decisions easier. Book your place today. But hurry; spaces are limited, and this will be the last one for 2023!
• Or, if you’re ready for a one-to-one chat, why not take advantage of our free meeting? Simply complete the form below, and we’ll be in touch to arrange it.

Joslin Rhodes Pension & Retirement Planning – Real Advice, For Real People