Give yourself a mid-year pension MOT

July 27, 2021

Important information - the value of investments can go down as well as up so you may get back less than you invest. Before transferring a pension, compare all the benefits, charges and features and always seek advice if you are unsure.

A lot has changed in the past year and a half so, as we pass the mid-way point of 2021, it’s a good time to take stock.

All of us are likely to have seen our personal finances change in some way since the first lockdown was imposed last year. Perhaps you’re spending more in some areas but less in others. Or maybe you’ve been able to save a bit more each month and need to put that money to work for your future.

With life slowly returning to normal, it’s a great time to perform your own mid-year financial review. Like an annual MOT for your car it will help you make sure your savings are ticking over nicely.

Here’s how you can do it.

Set your targets

Saving towards your eventual retirement should be a central plank of any financial plan. But to reach the retirement you want requires a plan and realistic saving targets for you to aim for.

And that’s true whatever age you are. If you’re still in the early years of your career you’re unlikely to spend much time thinking about life after work, but a little bit of planning now could be of real benefit in the future. The younger you are, the more time you have to build your retirement savings and let any investment returns you get roll up for the future.

Use your pension MOT to draw up your own target with the help of Fidelity’s

Retirement Calculators. They allow you to enter details of your expectations for income in retirement, as well as your current levels of saving, to help you understand the progress you’re making.

Target 1 - How much do I need to retire?

One target to look at is the income you’ll need to generate in retirement. Fidelity’s research has shown that you need to have saved an amount worth 7 times your household income by the time you retire in order to enjoy no material fall in your standard of living in retirement. That’s based on various assumptions, including retiring at age 68 and achieving investment returns after costs of 4.75% a year.

But you can also work out how much income you think you’re going to need in retirement based on the lifestyle you want. Here’s where Fidelity’s

Retirement Calculator can help. Just enter some assumptions about the thing you hope to spend money on in retirement - like holidays, eating out, home improvement and the occasional new car - to give yourself an idea of how much you might need.