Business

Four Common Mistakes That People Make With Their Pensions

By Christy Bella | November 1, 2021

Table of Contents

When you are running your own business, you know that you always have your eyes set on the next goal. You need to be laser-focused on success, whether that means expanding into new areas or locations, becoming the leader in your field in your area, or creating something that is going to last long after you decide to step away. Over the last eighteen months, there has been a huge amount of additional pressure and we’re all worried about how to pay back loans that were necessary to our continued survival. What a lot of people do not think about when they are pushing their business to the next level is what happens after they stop working. Retirement is a clear goal for some, who may even have a specific age that they want to achieve it by, but many others push those kinds of thoughts to one side until that day arrives.

But even the most driven people need to think about their plans for what comes next when they step away from their small business. A good pension revolution is something that is easy to postpone but it is something that everybody needs. It is also something that can be extremely vulnerable. Even if you are actively working to create a nest egg that will see you comfortably through your twilight years, there are several classic mistakes that can put you in a less than comfortable position.

Whether you are the kind of person who likes to have a couple of investments for their retirement on the go at any one time, or you are just now realizing that you need to get your pension in order, here are a few of the most common mistakes to avoid, and a few tips to help you to manage finances and make the most of what you have.

Not Saving Enough

Let’s start with a basic one, shall we? One of the biggest mistakes that people make when it comes to their pension plans is not putting enough money into their savings. It is true that there is an Annual Allowance that gives a maximum amount that you can pay in before you start being taxed on it, that number is in the tens of thousands per year. An awful lot of people in the UK are not paying anywhere near that much.

Not Saving Soon Enough

Getting into a good saving habit early is a great idea. Leaving aside the fact that the sooner that you start saving, the more you will have when you retire, one of the most important things about creating a strong pension plan is getting into the mindset of it. You need to accept that a pension is not going to happen without your direct involvement so try to start as soon as you can to get into the habit.

Making Bad Investments

We have all heard stories about people who have been missold bad pension plans or have been convinced to invest in shady schemes. Some of us have seen it happen to friends or relatives. There are always going to be people out there who are looking for vulnerable people to con out of their life savings, and an important thing to remember is that a lot of them are very good at it. It is a terrible shock when we realize that we have been victim to something like this, but we have no time to waste. It is vital that you act quickly if you want to bring a claim forward if you have been mis-sold a pension or that you have been given bad advice resulting in the loss of money. To make sure you’ve not been missold your pension or to find out what your next steps might be, talk to a solicitor as soon as you can. Hugh James has resources to help you understand the situation and they can show you examples of their past successes in these cases.

Not Looking For The Best Deal

Just as many people would rather not think about their pension when they are younger, many people out there find the whole process of preparing for their retirement somewhat overwhelming. There are so many different schemes out there, so many different investment options, that it can be tempting to take the simplest route. Given how much financial uncertainty the pandemic has put us all through, we are all looking for the least amount of risk that we can find.

Many of us grew up thinking that property investment was one of the safest choices we could make with our money. But putting all your eggs in one basket is always a risky strategy and counting on the property market to be at the stage you want it to be at the exact time that you need it to be is a big gamble. Indeed, studies show the property bubble may be about to burst. Similarly, a lot of people will assume that they have an inheritance coming, or that their state pension will be enough. It is so important that you take the time to educate yourself on what your options are, what kind of pension you are looking at right now, and what steps you can take to boost your savings.