Sources of income
When deciding when to retire the most important thing to consider is making sure you have enough money to live comfortably. To help you plan your income in the future you should check your:
- State Pension
- personal or workplace pensions
- savings and investments
The amount of State Pension you'll receive will depend on the amount of National Insurance contributions you've paid or are treated as having paid. You can check to see how much State Pension you'll receive by getting a State Pension statement. You can only receive State Pension when you reach State Pension age.
- Current State Pension
- New State Pension
- Calculate your State Pension age
- Getting a State Pension statement
National Insurance credits
You may not be able to pay National Insurance, for example if you are ill or caring for someone. The government may give you credits so you can continue building up State Pension entitlement. Find out who can get National Insurance credits, and whether you need to take action.
Paying voluntary National Insurance contributions
You might not have enough qualifying years for a full State Pension. It's worth seeing if you can fill the gaps by paying voluntary National Insurance contributions. This could boost your State Pension.
You usually have to make up the shortfall within six years from the end of the tax year for which they are being paid. You may be able to do this even if you've already reached State Pension age. Some people can also pay for up to six additional years outside the usual time limits.
- Voluntary National Insurance contributions
- When and how to top up your National Insurance contributions (GOV.UK website)
Workplace and personal pensions
A workplace pension is arranged through your employer and is a way of saving for your retirement. An employer enrols eligible employees in a workplace pension. You can choose to opt out of this pension. If you stay in you’ll have a pension for your retirement.
Personal pensions are available from banks, building societies and life insurance companies that invest your savings on your behalf.
Find out more about workplace and personal pensions at the following nidirect page.
Tax and your personal or workplace pension
The government encourages you to save towards your pension by giving 'tax relief' on money you put into personal and workplace pensions schemes up to certain limits. In practice this means that money you would have paid in tax is used towards your pension instead. Find out more at the following nidirect page.
Savings and investments
Long-term savings and investments you have can provide extra income in retirement, but when taking these into account you should be aware:
- savings interest rates can fall as well as rise
- the return on investments is not guaranteed
- your investments will need to match your particular needs
- some investment and savings products are more tax efficient than others
There are several tax-efficient ways of saving and investing money for retirement.
Individual Savings Account (ISA)
With an ISA there is no tax relief on the contributions you make. You don't pay tax on the interest or most dividend income earned, or on 'capital gains' if you later sell the investment at a profit.
National Savings and Investments (NS&I)
NS&I offer one of the most secure ways to save and invest money because it's backed by the government. Some schemes pay interest that's taxable, while others are tax-free.
Many NS&I schemes are long-term investments, that may be suitable for saving towards your retirement.
Investing your money
If you save your money in a bank or building society account, your funds should grow – at least enough to stay ahead of inflation.
If you want your funds to grow more quickly, you could consider investing them. Most investments carry a risk – your funds can rise or fall in value. Investments include, for example, stocks and shares, bonds and collective investments and property.
It's best to get professional advice before deciding where to invest your money.
If you are not sure what type of savings account suits your needs, the Pensions Advisory Service can offer help and advice. Find out what advice they can give you on your savings and investments.
- Pensions Advisory Service
- Free financial advice (Money Advice Service website)
- Savings and investments (Money Advice Service website)
You may be able to get certain benefits and financial support in addition to your State Pension. Some benefits are age-related, others depend on your income. Find out more at the following nidirect pages.
Find out how much you will receive
You can check to see how much pension you'll receive on retirement from the State Pension, a workplace pension or a personal pension. You can also trace any pensions for which you may have lost the details. For more information visit the following nidirect pages.
- Getting a State Pension statement
- Forecasting your personal or workplace pension
- Find a lost pension
Increase your income when you reach State Pension age
There are several ways to increase your income after you reach State Pension age.
Putting off your State Pension claim
You don't have to claim your State Pension as soon as you reach State Pension age, even if you continue working. If you put off claiming you can receive a higher weekly amount or a lump-sum payment plus your State Pension.
Put off claiming your work place pension
If you have a workplace pension, your employer may allow you to put off claiming it until after your company's normal retirement age. It depends on the scheme. You can check with your employer or the scheme to find out.
You can start taking an income from a personal pension at any age between 55 and 75.
Get a one-off payment
If you defer claiming your State Pension for a year or more, you may be able to get a lump sum when you claim, instead of taking a higher pension.
Earn more doing the same hours of work
After State Pension age you don't pay National Insurance. So you take home more of your pay. Or you may be able to reduce your hours and still earn a similar amount.
If you were born before 6 April 1948, you are entitled to a more generous tax allowance.
There is no fixed retirement age in Northern Ireland. You may be able to boost your retirement income by working a bit longer, or by deferring your State Pension claim – or both.
Track down a lost pension
If you think you may have a pension but can't remember the details you can contact the Pension Tracing Service: