Ahh, pensions. Most of us have at least one, but how many of us actually understand how they work and feel fully in control of them?
If you’ve had multiple jobs over the years, it’s likely that you have almost as many pension pots - and if you’ve lost track of them, then you may think they’re gone for good.
But how can you prepare for the retirement of your dreams if you don’t know how much you’ll have saved for it – or whether you’re on track to achieving it at all?
If you’re paying into a workplace pension scheme each month and think what you’re putting in is enough, that may not be the case, and you might even want to consider upping your contributions to reach your retirement goal.
According to statistics, the average amount in a UK pension pot is just £42,651 – yet some experts recommend that if you retire at 67, you should have £237,000 saved.1
To help demystify pensions once and for all, we’ve identified four distinct personalities that we believe everyone falls under.
Take the quiz below to discover which one describes your attitude to your retirement fund and find out what next steps you may want to take.
Are you ready to take our pension personalities quiz?
Answer the questions below, choosing the option that best describes how you feel when it comes to pensions. If none of the answers fit you 100%, then go for the one that you can relate to the most, or the one that most closely describes your current situation.
Make sure you keep track of what you answered for each question so you can add up your results.
1. First things first: are you currently paying into a workplace pension?
A. No – I was automatically enrolled into a scheme but decided to opt out – I want that money now, so I’ll start paying into one when I’m older!
B. Yes – I was automatically enrolled but don’t know as much about it as I should
C. Yes – I’ve read up on my workplace pension and know how much I’m paying in
D. Yes – I know my workplace pension scheme inside out, and I’ve chosen to contribute more than the minimum requirement in order to save more
2. What do you know about the State Pension?
A. Nothing at all – what even is the State Pension? Is it something I’m entitled to?
B. I know it’s a pension I can get that’s funded by the government, but that’s about it
C. I’ve looked up my State Pension age, but I don’t know how much you can get
D. I know what I need to do to qualify for the full amount and I have already calculated how much this will add to my retirement fund
3. Have you set any goals for your retirement?
A. No – I feel like this is too far away to start planning for. I want to live in the now!
B. No – this is something that scares me, so I try not to think about it. I need to get my pensions sorted out before I start planning my retirement
C. Yes – I have some ideas of how I’d like my retirement to look, but I’m not sure what the best way to achieve this is or how much money I need
D. Yes – and I’m excited as I know exactly how much money I need to achieve my aims!
4. Are you keeping track of your pension pots and know much is in them?
A. No – in fact, I don’t know if I have any pensions, and if I do have any, I have no idea who they are with or how to go about finding them
B. No – I know I have a few from past jobs and have access to some of them, but there are definitely some I need to track down and see how much is in them
C. Yes – I know who they are with and have a rough idea of how much is saved in each one, but I need to combine them into one pot to make it easier to keep track
D. Yes – I’ve already done the hard work of consolidating them into one and I regularly check how much I have saved to ensure I’m on track
5. Have you set up a personal pension (SIPP)?
A. What is a personal pension? I thought my employer took care of my pension for me?
B. No – I’ve heard of personal pensions, but I’m not sure if it is the right option for me
C. No – I’m close to setting one up and transferring my past workplace pensions into it, but I just haven’t found the time to get it sorted
D. Yes – I regularly pay into one and regularly keep track of how much I have invested, as well as how much I could have saved when I do retire
Once you’ve answered the questions, add up your results to see if you mostly answered A, B, C or D, then see which personality you are from the list below.
Your results: which pension personality describes you?
1. Mostly As: Ignorance is bliss
In all honesty, pensions rarely cross your mind. You feel like retirement is still very far away, so it’s something you don’t need to worry about until closer to the time. Right?
What could be your next steps?
It doesn’t matter whether you’re in your 20s or your 40s – it’s never too soon to start preparing for your retirement, and the sooner you start saving, the more you could have in your retirement pot when the time does come. If you want to retire earlier than expected, it might be worth seeing how much you have saved already and what you can do in order to achieve this - use our pension calculator to help give you an idea.
However, you may not know where your pensions are if you’ve neglected them. As a starting point, you may want to track them down – look through any old letters you have, speak to old employers, or use the government’s pension tracing service to help locate them.
We’ve even written a handy guide on how to find old pensions that may help you.
2. Mostly Bs: Overwhelmed by options
Like an ostrich, you bury your head in the sand when it comes to anything related to your pensions. You want to take control of them, but don’t know where to even start.
What could be your next steps?
Breathe and stay calm. Pensions aren’t as confusing as they may initially seem and combining them into one pot (with a provider like Wealthify) can help you to keep track of what you have saved more easily. However, if you’re unsure, you should seek financial advice before investing.
You may also have more control over how much you pay in and save money on fees (yep, that’s right – even if you’re no longer paying into your past workplace pensions, you will still be charged to keep them open).
Look into your existing pensions to check what your current fees are and whether you’ll be charged to transfer them, then it could be beneficial to research new providers to find the best one for you. At Wealthify, you can transfer your old pensions into one Personal Pension that you can continue to pay into if you wish – and you can control how much you put in and how often.
We also charge low fees, so you might be able to reduce your costs too.
3. Mostly Cs: Almost in control
Good job! You know where you’re at with your pension and feel confident about your retirement. You know who your pensions are with and how much you have saved in each one so far.
What could be your next steps?
If you haven’t already, you could consider combining your pensions into one to make them easier to manage.
By transferring your past workplace ones into a Personal Pension (such as the one we offer), you may be able to reduce your fees, and it will be even easier to keep on top of how much you've saved.
The beauty of pensions is that you’re not limited to just one. In fact, our Personal Pension could be a great way to complement your basic State Pension (which is government-funded and will be based on your National Insurance contributions), or any workplace schemes you’ve been enrolled in over the years. At Wealthify, you choose how much you pay in and how often, as well as what risk level you want your investment to have.
Why not try out fancy new pension calculator and see how much you could get?
However, please remember that with all investing that your capital is at risk.
4. Mostly Ds: Absolutely bossing it!
Well done, you – this is what everyone should aspire to be when it comes to their retirement. You know exactly how much you need for yours and you’re firmly on track to achieving it.
What could be your next steps?
You’ve already done the hard work of combining your past workplace pensions into one. Now you may want to check you have the best deal for you. You may want to check if you can reduce your fees or have even more flexibility over how your savings are invested by researching different pension providers and what they can offer.
As an example, if you’re concerned about social and environmental issues, you may want to make your pension ethical with Wealthify. Just remember, that with all investing, your capital is at risk.
Unsure how? Because pensions are typically invested in the stock market, you can choose to invest your retirement savings in businesses that are committed to doing good. This is great news if you want your money to have a positive impact on the future of the world.
You may also want to consider ways to save even more for your future. Don’t forget, everyone in the UK has a £20,000 yearly ISA allowance – and you might not be taking full advantage of yours. So, why not open a Stocks and Shares ISA to invest any additional savings you have and see if they can grow?
Check out our guide to investing in the stock market for more information.
Whether you think ignorance is bliss or you’re absolutely bossing it (even if you do say so yourself), you can never be too prepared if you want a perfect retirement doing the things you enjoy with the people you love. Find out more about our Personal Pensions and Pension Transfer service and whether they could help you to achieve your aims.
The tax treatment depends on your individual circumstances and may be subject to change in the future.
Please remember the value of your investments can go down as well as up, and you could get back less than invested.
Wealthify does not offer financial advice. Please seek financial advice if you're unsure about investing.
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