As you come to the middle of your career, you may start to think more about your plans for life after work. Taking time to complete a mid-career pensions MOT, looking at all your different retirement savings, can help keep you on track for a comfortable retirement. This is an important time to be considering:
How much you have already saved for your retirement?
How much you might need in retirement?
Whether you have a retirement savings gap (the difference between how much you have already saved and how much you might need),
How you could start to bridge a savings gap
Now is also a good time to start gathering key information about your retirement savings, consider bringing some or all of your retirement savings together and think about other important later-life planning.
Some small tweaks to your financial choices now could make a big difference when you’re ready to take your retirement savings in the future. Our mid-career pension MOT podcast and guide can help you to take stock of your current pension savings, start to think about how much you might need in retirement and to set some retirement saving goals.
Read our mid-career pensions MOT guide
Listen to our mid-career pensions MOT podcast
Once you have set your savings goals, the Pension Freedom Planner on My Pension can show you whether you’re on track to reach your goals or whether you have a savings gap. Our member blogs have lots of ideas for how you can fill a savings gap and get the most from your DC pension pot.
Use the Pensions Freedoms Planner
Read our member blog
Midlife Money Mastery: Getting the most from your DC pension pot
Launch the Pension Freedoms planner
If you are not on the HSBC network you can access My Pension here, you'll need your username and password to log in
You have some choices around the type of income that you can take in retirement. It’s worth taking some time to understanding these options, the important differences between them and how you can mix and match them in a way that suits you. Our retirement webcasts explain more and you can find then on the Retirement Pension Webcasts page.
If you have invested your DC pension pot in one of the Scheme’s Targeted Investment Strategies, you should consider choosing investments that match your income plans in retirement. This is because, as you get closer to retirement, each of the Targeted Investment Strategies uses a different mix of investment funds for your DC pension pot.
The default or automatic investment option if you don’t make your own choice is the Flexible Income Strategy. This strategy is designed for members who plan to take a flexible income (e.g. using income drawdown) when they retire, spreading the amount and timing of withdrawals. You can choose a different option at any time, including the Lump Sum Strategy, or the Annuity Purchase Strategy. Just log-in to My Pension, go to the My Investments tab and choose the ‘Change my Investments’ drop down.
If you have invested your DC pension pot in the Freechoice range of funds, you still need to review your fund choices regularly to make sure your chosen investments still meet your goals. This is especially important as you get closer to retirement. If you are thinking of making a change to your investments, we recommend that you consider speaking to a regulated financial adviser. To find a financial adviser you can visit the MoneyHelper website at https://www.moneyhelper.org.uk/en and go to their find an adviser page.
If you’re not on track to meet your savings target and you can’t afford to save any more right now, you could think about changing the age that you plan to retire (called your Target Retirement Age) .The longer you save into your DC pension pot, the more chance it has to grow so delaying retirement by even a couple of years could increase your retirement income. Your Target Retirement Age is also important because it’s how we know when to change the mix of investments for your DC pension pot if you are invested in one of the Scheme’s Targeted Investment Strategies. You can update your Target Retirement Age by to logging-in to My Pension. When you’re in My Pension, click the ‘Change my investments’ dropdown under the My Investments tab and look for the Target Retirement Age tile on the right-hand side.
There are a wide range of tools to help you plan for life after work, from tools to help you work out how much you might need in retirement, to tools that help you to trace a lost pension or boost your state pension. Here are some tools that we think our mid- career members will find useful:
Find out what life might look like in retirement
The Pensions and Lifetime Savings Association’s Retirement Living Standards website www.retirementlivingstandards.org.uk - shows what life in retirement looks like at three different income levels. Each income level is based around a particular retirement lifestyle - "minimum", "moderate" or "comfortable". It also takes into account different circumstances (e.g. living inside or outside London). It gives you a sense of what you might be doing and how you could be spending your money when you finish work.
Many people think that wills are only something that older people need but if you have any assets, it’s important to have a will whatever your age. It’s the only way to be sure that your wishes in relation to your money, property and possession are met after you die. To find out more about writing a will, go to the Family and Care page of MoneyHelper at https://www.moneyhelper.org.uk.
Your State Pension could be an important part of your retirement income. It’s worth finding out how much you will get and when you can start taking it by going to: www.gov.uk/checkstate-Pension If you find that you’re not on track to get the full State Pension when you retire, you may be able to give it a boost by making voluntary National Insurance (NI) contributions. The government can set specific deadlines for making these voluntary contributions for particular years, so it’s important to regularly check for any deadlines so you don’t miss the opportunity to boost your pension. To find out more about paying additional NI contributions go to: www.gov.uk/voluntary-national-insurance-contributions
How long will your DC pension pot need to last?
People are living longer. According to the Government’s Office for National Statistics (the ONS), a 65-year-old man in England could expect to live to at least age 85 and a woman to age 87 and many people will live long beyond this. This means you could be retired for 20 years or more. If you decide to retire before age 65, you will need to plan for your money lasting even longer. The ONS Life expectancy calculator can help you work out how long your savings might need to last, taking into consideration factors like your age, gender and lifestyle – you can find their calculator here: www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthandlifeexpectancies/articles/lifeexpectancycalculator/2019-06-07
If you need some more help to decide the investment option that is right for you, it's worth thinking about getting some advice from a regulated financial adviser. Using an adviser can be expensive, so make sure you've read all of the information available to you first. MoneyHelper offers free support on a wide range of financial matters, online and over the phone. Go to the pensions and retirement section at MoneyHelper.org.uk. You can also use this service to find a retirement financial advisor.
The DC member guide tells you all about your DC pension pot. You will find lots of information and explanation about your options and benefits including details of how pension tax works. If you have a question about your Scheme benefits, these guides are the first place you should check
