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Closing your retirement savings gap

When your savings don’t meet your desired retirement income, you’ve got a retirement savings gap. In this article we explore some of the ways you can close it.

Stretching your savings

It’s easy to see why so many people dream of an early retirement - more time to enjoy life, travel and appreciate family and friends. But a longer retirement means stretching your savings even further.

If you’ve identified a gap in your retirement savings, or you dream of an earlier retirement, here are some ways you could look to close your retirement savings gap.

Maximise your workplace pension contributions

If you have a workplace pension, maximising your contributions is likely to be the best way to close your retirement savings gap. Some employers match your contributions and you may be eligible for tax relief.

But your workplace pensions don’t have to be your only sources of retirement income.

Get a personal pension

A personal pension is one you arrange yourself, often Defined Contribution pensions that pay out based on how much is paid in.

A self-invested personal pension (or SIPP) is a pension ‘wrapper’ that holds investments until you retire and wish to start drawing a retirement income.

Find out more about personal pensions at gov.uk here.

Save with a Lifetime ISA

A Lifetime ISA can be opened by those aged between 18 and 39, and any money saved into a Lifetime ISA receives a 25% government bonus if it is used to buy a first home or for retirement.

You can save or invest up to £4,000 in a cash or stocks and shares Lifetime ISA each year until you turn 50, and you can withdraw from it tax-free from the age of 60 to use for your retirement.

If you need to withdraw your money sooner for any reason other than buying a first home, it will be subject to a 25% withdrawal charge.

Discover our Lifetime ISA, which invests in stocks and shares.

Release equity from your home

Equity release allows you to turn equity in your property into a lump sum or a series of flexible payments that could help you close your retirement savings gap.

Lifetime mortgages are the most popular form of equity release. You can borrow money against your home that is repaid when you die or enter long term care from the sale of your property. There are also payment options which mean you can manage the size of the loan and its interest.

Equity release is available to homeowners aged 55 and over. Find out more about equity release.

Invest in buy to let property

If you have enough money or are willing to borrow or take out a mortgage, buy to let property could provide additional retirement income.

This should be considered carefully with the risks of falling property (and rental) prices, rising interest rates and non-paying tenants as well as the costs involved which may include letting agent fees, stamp duty, and income tax on your rental profits.

A man holding a camera, jumping over a small gap.

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See how much equity you could release by entering your details below.

Maximum loan amount:

Important: The loan amounts above are an illustration of the amount you could borrow. The actual amount may vary depending on your individual circumstances. The figures are not guaranteed and do not constitute an offer to lend. The loan amount will need to pay off any existing mortgage secured against the same property.

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