Taking Control Of Your Retirement in 2023

In the UK, many people are sleepwalking into retirement. The nature of PAYE means that it’s easier than ever to build a retirement fund – you can simply earn more, and your contributions will increase without little thought. However, with pension policy up in the air according to the Financial Times, it’s a good idea to start seriously thinking about taking control of your own retirement plans. Opening your eyes and looking to proactively manage pension funding can help your own post-career to be more comfortable and, in some cases, arrive early.

Taking Control Of Your Retirement

Taking Control Of Your Retirement

Operating your account

Most British workers involved with the pension automatic enrolment (AE) scheme will be on the defined contribution pension plan. This is typically married to very low risk schemes which seek to maintain the value of the pension pot, though many schemes will offer a somewhat higher risk strategy (typically stocks and shares schemes). However, employees have the right to manage their own funds within a SIPP (self invested personal pensions) according to the Morning Star.

This opens up the potential for targeted investments by yourself, such as through gold investments or stocks and shares, which can lead to a greater level of return on your money and, therefore, a larger pension pot. There is, of course, risk associated with this. Employer pensions match your contributions from their own budget, which is important and a source of significant contribution to the pot.

Weighing the risks

Of course, there is a risk with investing on your own – all investments have at least some risk. The markets are volatile, and capital is always at risk during investment. Hargreaves Lansdown estimates that £19.4 billion in unclaimed pensions are sat in the current market, many of which have made their earnings from consistent investments and the work of interest rates. Losing out on your money, or not having close control of the administrative control of those accounts, can lead to disaster – as can investing poorly.

Be well aware of the risks, I certainly wouldn’t recommend day trading – defer to high quality indexes and stocks, or speak to financial advisors. If it sounds too good to be true it probably is.

Retiring early

The dream, of course, is to retire early. Supposedly the government is making this easier – the Manchester Evening News reported in December 2021 that 20 million residents would be receiving their state-funded pension earlier than thought. Pairing this with wise investments can give you a solid income to fund your lifestyle well before your 60s ever hit; even retiring at 60 is a dream for many British people, and is absolutely achievable if you put the right work into your investments.

My aim is to retire at 55 and I hope to use passive income to my advantage to support this aim. As well as contributing to my workplace pension, making additional pension payments, investing regularly, I’m also investing in my own business which I hope will continue to earn me an income into my retirement.

There are lots of ways you can achieve early retirement, our unique lives mean our ability to put money away may differ entirely from those around us, and can change throughout our lives just as much. The most important thing is that you take a look at your current financial position and plan for where you want to be in the future.

Retiring early can give you more time to enjoy the things you truly love in life, but it’s important to remember that it’s harder to get back into work and high salaries once you’ve given up your career. Making the right decision is tough, but absolutely doable. Taking control of your financial future by investing the time to review your retirement goals is the way forward.