A robust retirement plan ensures that you’ve covered all your bases and that you can live the lifestyle you want when you finally finish working. It’s important to not fully rely on your state pension payments as they can be insufficient. But here are some ways to ensure your retirement payout doesn’t disappoint.
This does not constitute advice and advice should be sought in all instances before acting on it.
Why your payments might be lower than expected
If you reach your state pension age after April 2016, the full flat rate state pension is £179.60, but you might not be set to receive your full pension payout for a variety of reasons.
First of all, the state pension system is complex and what you ultimately receive depends on a few different factors:
- Insufficient National Insurance credits – If you ever took time away from work, lived abroad, or didn’t earn enough to qualify for a full national insurance year you might not have enough credits to qualify for a full state pension as a full payout is only available to those with 35 years of credits.
- You’ve been contracted out – Under the old system (before 2016) it was possible to contract out of the “additional state pension” to pay less NI contributions, and in exchange a workplace or personal pension was topped up instead.
- Being a stay-at-home parent – If Child Benefit is registered and paid to the working parent in the home, the stay-at-home parent might miss out on NI credits and affect their ability to receive a full pension.
Make sure your payout doesn’t disappoint
The first step you take should be to check your state retirement age and entitlement via the official government website. Once you know this information, you can plan accordingly.
If you are currently or were ever a stay-at-home parent, chances are you missed out on state pension credits, but if you claim Child Benefit, you can actually earn those credits back. There is also the Specified Adult Childcare benefit for those who look after a family member under the age of 12 while the other parent or carer returns to work.
You can also earn credits if you’re sick – ill or disabled and receiving sick pay or other benefits.
Alternatively, if you can afford it, you can buy some credits. You need to confirm whether or not you have any gaps in your NI record and check your eligibility. This could get costly and there’s no guarantee that it will boost your pension in the end.
Finally, if you’re over the state pension age and on a low income, you might qualify for Pension Credit. This tops up your weekly income and entitles you to other benefits like council tax assistance and if you’re over the age of 75, a free TV licence.
Work with a professional
Of course, individual circumstances will vary and your solution should cater to the specific reason(s) why your payout might fall short. Consulting with a professional financial adviser that specialises in medical financial planning will help you ensure you’re paid in full. To get a handle on your retirement plans, get in touch with us today.
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