If you dream of a retirement filled with extended holidays and fancy dining, you need to think about how you will fund it. For many of us choosing the right pension plan and keeping track of said pension isn’t always easy, but it’s essential if we are to manage well in later life. Digital tools have become synonymous with modern day living so it’s logical to use them to help manage our pensions too.
The pension challenge
Most of the general public are unrealistic about the pension they can expect in retirement. Indeed, just 7% are on track for the pension they want, according to market research. Their current monthly savings fall drastically short of what’s needed to secure the level of pension they expect in retirement.
State pensions have fuelled many political debates in the UK in recent years. The reason most people choose to pay into a private pension is to supplement the state pension, which is currently just £115.95 per week at the basic rate. If pensions weren’t complicated enough, a new state pension scheme comes into force in April 2016. Although basic payments will be higher than currently, you will have needed to pay National Insurance contributions for at least 35 years to receive the highest amount.
How digital tools can help
Across the age spectrum, apps and web tools have become an important way to manage our lives. More than half of UK adults use online banking, yet little over 10% manage their pension online. A digital tool can help take the pain out of pension planning. This was Aegon’s aim when they launched Retiready last year, a digital tool to help customers save effectively for retirement and manage their savings in an easy way. Because many private pensions are arranged through work, an individual can easily end up with multiple pension pots. Retiready can collate all of this information in one place to help customers see what their pension is worth as a whole, alongside new plans or ISAs.
The tool also offers a way to kick start your plan by ‘scoring’ your current pension arrangements so you can see if you are way off track. It helps you to pay into a pension or ISA, as well as tracking investments you already have. An online coach will remind you to review your plan regularly as well as providing hints to getting the most from your savings.
There are plenty of other options for digital financial planning, as well. The Money Advice Service has a pension calculator to help you predict your future income and make adjustments now, and Money Saving Expert has published an online guide to help you answer some of the most common questions about personal finance in retirement. A unique app, Hello Wallet not only helps you track your spending, but also uses your habits and goals to create presonalised messages to help guide your activity.
If you’ve worked your whole adult life, then you’ve earned a stable retirement. Though it can seem daunting to tackle retirement planning head-on, it’s getting ever-easier and more transparent with the raft of tools available now—so there’s no excuse not to make this the year you sit up and take note of your savings.
Photograph by Luke Chesser
