Six simple questions to help build a better retirement

For many people, retirement can feel like a problem for another day. When you're juggling rent or mortgage payments, rising household bills and the general cost of everyday life, it's easy to put pension planning to the bottom of the list. For younger generations in particular, retirement can seem like a lifetime away.

The good news is that building a better retirement doesn't always require saving hundreds of pounds every month. Small actions taken today can make a meaningful difference over the long term.

Marc Perry, LV= Advice and Consumer Channel Director, shares his insights.

1. Am I saving enough?

One of the biggest misconceptions about pensions is that you need to contribute large sums every month for it to be worthwhile. While saving more can help to improve retirement outcomes, saving something is always better than saving nothing. Regular contributions can build over time thanks to investment growth and compound returns. For example, a 20-year-old contributing £50 per month, equivalent to £600 per year, could build a pension pot of approximately £261,000 by age 70, assuming average annual growth of 7%. Even by age 65, this could amount to around £185,000. Remember, pensions also benefit from tax relief. For every £1 many basic-rate taxpayers contribute, the Government effectively adds an extra 25p, meaning £1 contributed becomes £1.25 in your pension.

2. Do I really know how much I'll need in retirement?

Many people underestimate how much their retirement will cost, and overestimate how much income they'll receive from the State Pension. The State Pension can provide an important foundation, but for most people today, it is unlikely to deliver the retirement they hope for on its own. A simple starting point is to add up your monthly outgoings, such as mortgage or rent, bills and household expenses. This gives you a baseline for your current lifestyle and a rough idea of the income you'll want your pension to provide in retirement. While your costs may change over time, it helps put a realistic target in mind.

3. Am I making the most of workplace pension contributions?

Automatic enrolment has transformed retirement saving, helping millions* more people build pension savings than in previous generations. However, many employees may not fully understand how their workplace pension works or how much is being paid in on their behalf. Checking pension paperwork can help ensure you're getting the full benefit of employer contributions and any Government tax relief available. It's also worth reviewing how much you're contributing, whether increasing contributions is affordable, the level of employer contributions available, and whether your current pension savings are on track to support the retirement lifestyle you desire.

4. Have I been putting this off?

Retirement can feel so far away in your twenties and thirties that it's easy to assume you'll think about it later. The reality is that later often arrives sooner than expected. Taking five minutes to review your pension once a year or increase contributions when your salary rises, can mean the difference between tens, hundreds or thousands of pounds over the long term.

5. Do I understand what happens before and after retirement?

Most people think about pensions as simply saving for retirement, but there are two important stages to consider. The first is building up your pension throughout your working life. The second is deciding how you'll use those savings to support your lifestyle once you stop working. Retirement isn't the single event it once was. People are living longer, working more flexibly and often moving between multiple employers throughout their careers. As a result, many will build up several pension pots and face a range of choices when it comes to accessing their money. Understanding where pensions are held, how they're invested and what options may be available in later life can help you make more informed decisions both now and in the future.

6. Could increasing your pension contributions benefit you?

If your circumstances have changed, it's worth considering whether you could afford to increase your pension contributions, even by a small amount. Making additional pension contributions may increase your retirement savings and could provide tax benefits, depending on your individual circumstances. This can be particularly valuable for higher earners, helping some people stay below key income thresholds where benefits begin to reduce or tax rates increase. For some people, pension contributions may affect their taxable income and could have implications for income-related thresholds such as:

• The tapering of Child Benefit for those with an income between £60,000 and £80,000, meaning you pay back 1% of your Child Benefit for every £200 of income over £60,000 via the High Income Child Benefit Charge.
• The loss of tax-free childcare and free childcare support for those earning more than £100,000.
• The reduction in your Personal Allowance above £100,000, which can result in a higher effective rate of tax.

Even a modest increase in contributions could make a meaningful difference over time, while potentially improving your tax position today.

Small actions taken today can make a meaningful difference over the long term. After all, your future self may well thank you for it.