Wrap up your finances: 7 simple steps to getting your pension savings in shape for the New Year

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MoneyPlus Features Team

December 10, 2021

5 mins read

End the year with peace of mind that your pension savings are working for you and are ready for the year ahead. Follow these seven steps to get ready for 2022.

It’s almost the end of another year and 2022 will be here before you know it. So why not take advantage of any extra down time you have over the festive period by making sure your pension savings are in tip-top shape for the year ahead? Taking the time to prepare now could save you some stress later, and help you feel confident that your savings are heading in the right direction.

Here are seven quick things you can do to make sure you’re on track for 2022.

1. Look at what you have vs what you need

The end of the year is a good time to take stock and check on your pension to see if you’re on track to meet your goals. The first step is to look at what you have. Check the value of your pension plan. Are you where you thought you’d be at the end of 2021?

Next, check how much you’ll need. The Retirement Living Standards can give you an estimate of how much you might need to achieve the lifestyle you want in retirement – and the guidelines have changed recently, so make sure you know the most up-to-date figures. They even take into account a lot of day-to-day expenses like food, drink, leisure and clothing, so they can give you a fair idea of how much income you might need.

Finish up by checking to see if there’s a shortfall between what you’re on track to have and what you need. There are helpful tools online which can help you do this – like our pension calculator. If you find that you’re behind where you want to be, try reading our five tips which could help you boost your pension savings.

2. Check how much you can pay in 

It’s the end of the year now, but the end of the tax year in April is looming too. So make sure you make the most of any tax-free benefits before then.

Remember when it comes to your pension plan most people can pay in £40,000 or the total amount you earn in the tax year, whichever is lower, including tax benefits. This is known as your annual allowance and it’s the amount that can be paid into any of your pension plans in a tax year and includes contributions from you, your employer and any third party.

The good news is if you haven’t used all of your allowances from the last three years, you may be able to carry them over and still get the tax benefits. Something to think about if you’re due a bonus or salary increase at the end of the year, or even if you just have some extra savings and want to put them towards your future.

3. Prioritise your financial wellbeing

2021 was a mixed bag for a lot for people. So along with your mental and physical wellbeing, it’s important to check in with your financial wellbeing to make sure you’re in a good spot.

To get started, check out our tips for giving yourself a money MOT.  

4. Review your budget 

Take a close look at the budget you followed this year and be honest with yourself about any improvements that could be made. Could you be saving more? Was it a bit too hard to stick to? Or have your circumstances changed since you created it? 

If you haven’t set a budget before or just need some tips, MoneyHelper has a lot of useful information on budgeting, including a budget planner tool.

Keep in mind that any extra savings could be used to top up your pension savings. Payments into your pension plan benefit from tax benefits, so even increasing your payments by a small amount could make a big difference to the value of your plan over time. You can increase your Standard Life pension payments online or through our mobile app.

Remember the value of investments can go down as well as up and you could get back less than was paid in.

5. Manage your money online

Make your life simpler by managing your pension plan online. These days it’s easier than ever to keep track of your savings online. 

As a Standard Life customer, registering for online services allows you to check how much your plan is worth, update personal information and even switch where your pension money is invested in most cases. It also makes it simpler to keep track of your pension plan, even if you move jobs or home.

If you have the Standard Life app on your phone or tablet, you can do a lot while you’re on the go too, including changing your pension payments and viewing how the funds you’re invested in are doing. Plus, downloading our app means you can use touch ID or Face ID to log in which keeps your information secure and means you don’t need to remember your login details, making it quick and easy to check on your plan’s progress.

6. Keep an eye on your investments

You should regularly review your pension investments throughout the year to make sure they’re still right for you. You want to be comfortable that what you’re invested in is in line with your goals and your attitude to risk – which are likely to change at different points throughout your life.

It’s also generally a good idea to make sure you have a good mix of investments across different investment types and locations. This is known as diversification and it’s one of the best ways to help cushion yourself against the worst of market ups and downs during difficult times.

It’s also important to consider the impact your investments can have on your pension pot and the planet. Find out how you could potentially grow your pension pot and do good in our recent article.

7. Make a plan

Finally, make a retirement plan – not just for next year, but for the years to come too. It’s never too early to start thinking about your future, even if it feels far away. If you already have a plan, take some time to review it carefully and make sure it still suits your needs.

Try our retirement planning guide for a step-by-step guide to creating your retirement plan.

The information here is based on our understanding in December 2021 and shouldn't be taken as financial advice.

Standard Life accepts no responsibility for information contained on external websites. This is for general information only.

 


 

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