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Home Tradesman Insights Building a solid retirement: Have you started your pension fund?

Building a solid retirement: Have you started your pension fund?

After decades working on sites, you deserve relaxing years enjoying hard-earned rewards without money worries. But regulatory pensions changes make reliance on state provisions and property investments increasingly risky strategies for financing later life alone.

By proactively building your own private pension pot now, you can bankroll the comfortable retirement you’ve earned through years of professional expertise and back-breaking work. 

Maximise State Pension Entitlements

Despite recent freezes and delays to state pension ages, maximising national insurance contributions history remains essential building first income foundations by:

  • Checking Contribution Records – Request an official statement of accrued credits so far from the Pension Service to identify any gaps unexpectedly jeopardising expected entitlement amounts.
  • Claiming Credits – If unemployed, sick or in-training periods show gaps, submit claims allowing voluntary top-up contributions to recover missing years. This prevents reduced payments.
  • Delaying Drawing Down – Consider deferring initially claiming your state pension if you are still working. Extra annual increments earned temporarily outweigh immediate income gains for most.
  • Consolidating History – If you previously lived abroad, have overseas social security contributions transferred to the UK system where eligible under bilateral agreements, boosting entitlements.

Start Your Private Pension

Alongside state provisions, building sizeable supplementary savings into your own pension allows financing the lifestyle you envisage through:

Automating Contributions

Arrange fixed monthly pension transfers from your bank account into a low cost, high performing fund aligned to your risk appetite. This builds discipline.

Claiming Tax Relief

As a UK taxpayer, you receive tax relief on pension contributions at your highest marginal income tax rate. This means the government tops up your savings by up to 45%.

Taking Employer Matching

Opt into workplace pension schemes benefiting from extra percentage top-ups to your savings from employer contributions. This effectively doubles your money.

Chasing Investment Growth

Target at least 8% annual returns by selecting reputable actively managed or index tracking funds strategically balancing risk and reward.

Consolidating Old Pensions

If you’ve changed jobs and accrued multiple small pension pots, combine these for easier low-cost management while avoiding lost paper trails.

Make Up For Lost Time

If you’ve left pension saving late as an older tradesperson, maximise accumulation potential through:

  • Increased Contribution Rates – Contribute well above auto-enrolment minimums compensating for earlier inertia. 
  • Delay Drawing Money – Defer accessing pension savings after retiring from full-time work for as long as possible. Funds left invested still compounding returns boost final values.
  • Downsizing Assets – Release cash from property sales for additional pension investments. With mortgages typically cleared closer to retirement, the gains generated get maximised.

Preparing For Long-Term Care

With UK life expectancy rising, retirement strategies must address potential care needs by:

Researching Care Costs

To understand potential future care costs, research the average rates in your local area for residential care homes, home health aides, and other senior care services. Some key questions to investigate:

  • What is the average daily, monthly, or annual rate for residential care homes in my area? Rates can vary significantly by level of care and amenities.
  • What do home health aides typically charge per hour? Rates often range from £15-25 per hour depending on qualifications and services provided.
  • What other care services may be needed (transportation, meal delivery, etc.) and what do they cost?
  • Will I need financial assistance for care? Understand eligibility and coverage for state/local senior care funding programs.

Estimate based on your projected care needs and life expectancy. 

Compare Specialist Insurances

Here at Tradesman Saver, we offer exclusive public liability insurance packages tailored specifically for builders, electricians, plumbers and other skilled tradespeople. We cover for your tools, vehicles, public liability and more. 

Protect the retirement lifestyle you deserve and contact the team for quotes today.

Tradesman Talk

What key milestones must you achieve over the next 5 or 10 years still to make your retirement fund targets? Do worries about later life care costs keep you awake at night? Share your pension building progress, obstacles and ambitions below.

Until next time, make sure it’s Tradesman Saver.

Dean Laming

Dean Laming is a Chartered Insurance Broker with more than 25 years insurance experience. Through various underwriting, operational and management roles, Dean has built up extensive knowledge of how to run a business and is now Managing Director of Tradesman Saver, part of the wider Henry Seymour Group.

All articles by Dean Laming

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