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How to boost your pension in retirement
As people live longer, many are finding their pension insufficient to meet their needs. Here are some ways you can supplement your income.
by Michelle McGagh on May 04, 2012 at 09:46
Building up a decent pension these days is hard, and many people are coming into retirement with less income than they would like. But there are ways to supplement a small pension income.
When income from company, private and state pensions are added together, the average pension income is £15,500 a year, according to Prudential. This figure has fallen from £18,600 five years ago owing to rocky stock markets and poor rates from annuities, which are the type of policy most people buy to convert their savings into an annual income, or pension.
Furthermore, one in five people expects to live on just £10,000 a year.
A lack of pension savings means there will be an increasing number of people who will be unable to live on their pension income, or will find that it will not cover the lifestyle to which they have become accustomed.
Independent financial adviser Arthur Childs, managing director of Guildford-based Arch Financial Planning, said those who have not saved enough do have a number of options to boost their retirement income.
One of the best ways to supplement your income is by not stopping work completely. The average retirement age has been steadily increasing as people live longer and healthier lives and financial circumstances prevent them from retiring.
According to the Pensions Policy Institute, in 1984 the average age at which men left the labour market was 64, although this increased to 65 by 2011. For women the average retirement age in 1984 was 61, rising to 63 last year.
A total of 11% of men were working past retirement age in 2011, compared with 8% in 1993. In 1993, 23% of women aged 60 to 64 were in work, and this had increased to 34% by last year.
Childs said working in retirement comes with a number of tax benefits, as over-65s do not have to pay national insurance contributions, and part-time workers have a higher personal income tax allowance.
‘Lots of clients have got part-time jobs. Some do it because they want to get out of the house and others because they need the money,’ he said.
‘Most people think now that they will do some sort of part-time employment in retirement to keep things going.’
He added that one client is trading Denby plates on eBay to supplement his income and ‘making quite a good living out of it!’
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