You may put off thinking about your pension because retirement just seems too far away. Do you take a quick glance at the pension contribution line on your payslip but that’s about it? Or maybe you only give it any real thought when you move to a new employer?

But the reality is, the earlier you start engaging with your pension, the more impact you can have on your retirement.

Avoid any surprises

The danger of not actively considering your pension is that you get to retirement age and discover you haven’t saved enough to provide you with a satisfactory income. This could mean you have to carry on working for longer than you‘d intended or that you have to settle for a lower standard of living in retirement than you’d hoped for.

Or you might even discover you had enough to have retired earlier but you’ve carried on doing a job you disliked for longer than you needed.

Whichever it is, you’ve not made the best of your pension planning.

Put plans in place early

In a survey by Aviva, research showed that 58% of non-retired people aged 45-60 were worried they would not have enough money to provide an adequate standard of living in retirement. Yet over 21% of non-retired people in the same age group were not taking steps to improve their retirement income.

It’s important to try to understand your pension and see if you’re on track. Knowledge is power. If you can work out how much you’ll need in retirement, you can work out if your current pension contributions are enough or if you need to top them up.

Think about the kind of lifestyle you would like when you retire. The Pensions and Lifetime Savings Association have drawn up three standards to help people visualise what they might need:

• Minimum – to cover basic needs with some left over for fun
• Moderate – to give more financial security and flexibility
• Comfortable – to give more financial freedom and some luxuries

They estimate for the minimum level a single person would need £10,200 a year, and a couple £15,700 a year. For the moderate level, they quote £20,000 for a single person and £29,100 for a couple, and for the comfortable level £33,000 for someone single and £47,500 for a couple.

These take into account expenses associated with house maintenance, food and drink, transport, holidays and leisure, clothing, and gifts for others.

As the full state pension is currently £9,339, this gives you an idea of how much extra you will need to cover these costs.

Alternatively, think about it this way. The Department for Work and Pensions state that “the average worker would need two-thirds of their pre-retirement salary as a pension in retirement to enjoy the same standard of living as during their working life.” Individuals earning in excess of £50,000 would need a lower amount of around 50% to have the same standard of living.

Work out if you’re on track

There are various online tools available such as the Money Helper calculator to help you work out what your monthly contributions will equate to when you retire. They show the potential effect of increasing or decreasing payments into your pension scheme.

Remember, adding a relatively small amount to your monthly contribution now could make the difference between a comfortable lifestyle in retirement and one where you’re just ‘getting by’.

Engage, enhance and enjoy

So, it’s important to find out as much as you can about your pension and look into what options are available. By engaging with your scheme now, you can take the right steps to make sure you live the kind of retirement you’ve always dreamed of.

Here, at Questa Chartered, any of our pension specialists will be happy to discuss your pension planning with you and check you’re on track to lead an enjoyable and comfortable retirement.