Cost of living survival guide for pension savers

Pension savers have had a tough year as household bills rocketed while investment pots meant to fund old age plummeted in value amid volatile markets.

The financial squeeze has been challenging for those still trying to put money aside, and those struggling to get by in later life.

If you are worried about your retirement fund and ability to keep saving or make ends meet, we will help you shore up your finances in hard times.

Survival guide: Pension savers have had a tough year as household bills rocketed while investment pots plummeted in value

1. How to decide if you can afford to retire

Not everyone has the luxury of choosing when they retire as health, family, redundancy and other factors can force your hand. Assuming you get to make your own mind up, how much you have saved and your likely income will be the top, or among the foremost, considerations.

We looked at the financial trade-offs to be prepared for, while pension experts offered tips on getting your finances staight before taking the big step into retirement.

2. Should you stop or reduce pension contributions

Growing numbers of people could be damaging their future retirement prospects by cutting back on pension saving due to financial pressure from rising bills. For some this will be unavoidable to keep feeding their family and maintain a roof over their heads, but in more borderline cases it is worth bearing in mind the long term benefits you stand to lose.

If your hand is forced, it is best to resume saving and try to make up the gap as soon as your circumstances improve.

3. Has your pension fund tanked as you near retirement

Unless you are lucky enough to have a generous final salary pension, you will be relying on your investments to fund your old age, either by drawing an income from them directly or converting your pot into an annuity.

Where does this leave savers staring at big investment losses, just as they plan to retire and starting tapping their pension pot? We look at what you might do to mitigate this plight.

4. Are annuities decent value again

Buying an annuity provides a guaranteed income until you die, but until recently they have been regarded as bad value for money and restrictive. Pension freedom reforms in 2015 have prompted most savers to keep their funds invested and live off withdrawals instead.

We look at how and why annuity rates have recovered this year, and what you should weigh up when deciding if now is the time to buy.

5. Should you combine investment drawdown with an annuity

Do you want investment growth and a guaranteed pension? Rising interest rates have made annuities better value again, and meanwhile many people on the brink of retirement have suffered big investment losses and are wary of income drawdown.

There are halfway house options, and we look at how to combine drawdown and annuities to maximise retirement income.

6. Can you apply for pension credit

If you are elderly and not well off, pension credit tops up weekly income to a minimum of £182.60 for single people and £278.70 for couples. Like the state pension, it will be hiked by 10.1 per cent next April.

We explain how to apply, and what to do if you are elderly and anxious about bills, including five tips from an energy expert on what elderly and vulnerable people can do to cover higher heating costs.

7. Are financial pressures causing you anxiety or depression

More than half of adults have experienced anxiety and a quarter felt depression because of rising bills, according to recent research.

We looked at how to get on top of your finances, where to go for help, and what to do if you are panicking about investment losses or worried that your pension is falling short. This includes sources of help with mental health.

8. Should you take a 25% tax free lump sum at retirement

Taking a tax-free sum from your pension pot is a popular perk at retirement, but it might be worth adopting delaying tactics in volatile markets. You can still get 25 per cent of your pot tax-free if you opt to withdraw it gradually in chunks.

This gives you the chance to avoid locking in financial market losses, wait for your investments to recover, and if your pot grows again have more tax-free cash available to take in the longer run.

9. How to defend your pension from the taxman

Unfortunately, there are many tax traps for the unwary when it comes to pensions. It’s especially important to find out about them if you don’t get financial advice when you start tapping your fund.

Pension experts explain what trips people up the most often, and how to keep a retirement fund as safe as possible from the taxman.

10. Have you lost track of old pensions

Now everyone is auto enrolled into a new pension each time they change job we are all building up ever more pots, and many of us lose touch with them as time goes on.

Job switching and people’s tendency to lose pension information and not update schemes with contact details are behind the rise in orphaned pots.

We look at the best way to search out your old funds, using the Government’s free Pension Tracing Service as a starting point.

This post first appeared on Dailymail.co.uk