One thing people looking forward to their state pensions need to keep track of is any policy changes the government imposes, as this could significantly affect their lifestyle and retirement age. For example, if you mistakenly thought that you could start claiming your pension at 65, you might retire at that age then realize when it’s too late that you can’t get it until you’re 66. That leaves you with a whole year without cash.
To avoid such dangerous mistakes, here are some things you need to know about the new state pension.
People looking forward to UK state pensions must keep track of policy changes the government imposes, as this could affect lifestyle and retirement age.
The UK state pension age is now 66
A decade ago, men could only claim their state pensions at 65, while women could claim it at 60. However, the past few years have equalized that number and the government is proposing to set the qualifying age even higher: 67 starting 2026-2028 and 68 starting 2044-2046, though the latter decision has been proposed to be moved up to 2037-2039. These decisions come with the increased life expectancy of citizens.
This means that people in their 40s to 60s are going to have to wait a year or two longer to quit their jobs unless they have a private pension plan. Employers in the UK are not allowed to fire someone based on their age, but UK ex-pats are vulnerable because other countries do not have laws against mandatory retirement. South Korea, for example, enforces retirement on employees that hit age 60, but it’s common to be fired as early as 50 years old. This is why UK ex-pats should look into pensions for expats as soon as possible to safeguard their retirement abroad.
The UK state pension is set to rise by 2.5%
By April 2021, pensioners are expected to get an excess of up to £228.80 per annum compared to previous years. The weekly pension is now a maximum of £179.60, an additional £4.40 a week. Remember that this amount varies depending on how much and how many years you contributed to your pension.
This increase comes with the expected inflation that might occur post COVID-19. However, with the average cost of living in London set at about £2,249 for a single person, £179.60 a week is hardly good enough, especially for those who want to enjoy a comfortable retirement. Your best option is not to rely solely on your state pension for your retirement funds. Diversify your investments to minimize risks. The stock market’s behaviour in 2020 only demonstrated that putting all your eggs in one basket will lead to greater losses.
Staying informed on key financial aspects of your life, i.e. savings, investments, pensions, is essential to get a stable retirement.
Staying informed on important financial aspects of your life, such as your savings, investments, and pensions, is essential to get a stable retirement. You don’t want to spend the last years of your life worrying about burdening your loved ones and struggling to get by. While you’re still young, it’s best to save up and consult with experts on your investment portfolio. Since a lot of these are time-based, the sooner you start, the more returns you’ll get by the time you’re ready to retire.
Are you planning for your retirement?
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