However, stock market returns don’t always have to be this flashy. In fact, a mere 8% per year gain, with dividends reinvested, compounded over 30 years, can leave investors with a healthy figure. At 21 years old, this is a strategy I am currently employing to build wealth for later in life. Let’s take a closer look at three key ways I plan to do this.  

Compound interest and high dividends

So, where did I start? I currently invest a minimum of £200 per month into a Stocks and Shares ISA. I also invest in index funds, which mimic indexes like the FTSE 100 or S&P 500. Over the past 30 years, with dividends reinvested, these indexes have averaged returns of 7% and 10%, respectively. If I had started investing in the FTSE 100 with £1,000 to start and a £200 per month top-up 30 years ago – granted I wasn’t born yet – my investment would be worth over £250,000 today. Using the S&P 500’s healthier returns, I would have made over £470,000 from the same 30-year period of investing.

Another tactic I could use would be to focus on building a high-yielding dividend portfolio and reinvesting the cash generated. If my portfolio was generating 8% a year, with a 5% dividend reinvested, then my £1,000 would be worth over £920,000 when I was 50. Using this passive income hack is another way I can build a healthy retirement fund by benefitting from compounding.

Investing regularly

The key strategy here is to drip feed small amounts regularly. This investment style isn’t about generating big returns straight away, so there is no need to dump thousands into my portfolio at the start. This also helps to ease the pressure on my personal finances.

By investing small but consistent amounts, I also benefit from a phenomenon called dollar-cost averaging (or pound cost averaging in my case). Dollar-cost averaging works by investing fixed amounts consistently and benefitting from the overall upward trend of an asset, regardless of the price of each entry. This helps develop financial discipline as well as reduce the stress of investing.

Focussing on quality

The final way that I am looking to build a strong retirement fund is by making high-quality, long-term investment decisions. Whether this entails investing in index funds or choosing individual high dividend companies, I am going to take the long-term outlook. That is, investing in stable growth companies with a 30-year outlook, as opposed to high-growth stocks that could give me a quick return now.

Overall, by investing small amounts regularly, into index funds and high-quality dividend stocks, I think I can build myself a comfortable retirement fund over the next 30 years. There are always risks in investing in the stock market, but by taking this slow growth, consistent approach, I think I can make my money work in my favour for the future.  

The post Here’s how I’m using £200 a month to retire at 50 appeared first on The Twelfth Magpie.

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Dylan Hood has no position in any of the shares mentioned. The Motley Fool UK has recommended Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

These days it can be difficult to find the money to invest for retirement. As inflation continues to squeeze budgets, it can be tempting to cut back on long-term savings plans. Short-term needs can seem far more compelling.

I get it, we’ve all been there at times, and for me it was especially true when I’d only just started working.

At the same time though, I also had plans to quit the rat race early to be able to travel more. With the average retirement age in the UK being just under 65 years old, I knew I’d have to start investing early to beat that.

Having now retired early in my 40s, these are the two top tips on investing for retirement that really helped make it happen.

Reinvesting dividends for a better retirement

It can be eye-opening to see the impact of reinvesting dividends on market returns. Especially as time goes on and those reinvested dividends start to earn their own returns — the so-called snowball compounding effect.

For example, the FTSE 100 average return is usually quoted as around 7.9%. What people often don’t mention is that includes reinvesting dividends. Without doing that, the average rate drops to around 5.8%.

The difference may sound small, but if I had invested a lump sum of £10,000 back in 1984, the impact today would look like this:

After 10 years, the gap is small at just under £4k. But by the start of 2022, it’s a far more substantial amount at around £95k extra. That’s pretty much twice the final pot size between the two different methods of investing!

That difference comes from the FTSE 100 average dividend level of around 3.5% over the same time period. So imagine how that gap widens when I target dividend shares above that rate.

That could be Rio Tinto, M&G and Persimmon — if invested equally between them, I’d get an average blended dividend rate of around 11.5%. That’s only going to widen that gap with this reinvestment approach.

That’s great — but where I saved my cash mattered too. Time for tip two!

Planning matters when investing for retirement

When it comes to investing for retirement, planning ahead matters.

I’ve always invested in pension schemes first for the tax rebates they offered. But it’s my ISA investments that offer me far more flexibility.

By using a Stocks and Shares ISA, I can invest up to £20k each year free of any capital gains. And now, I’m also able to withdraw a regular tax-free income to fund my early retirement.

If I’d bought those three shares mentioned above, then after just 10 years of maxing out my ISA I’d have about £350k in total, ignoring any capital growth. That would give me a healthy annual tax-free income of almost £40k!

Picking the right investments for retirement

I honestly couldn’t have retired early without using these two tips for investing for retirement. But it’s worth saying that (unsurprisingly) it’s as important to pick the right underlying investments.

Dividend yields are prone to change and inflation needs accounting for — especially these days. But taking the time to research what’s best for my personal risk/reward appetite really paid off.

It’s not always been easy, but these two tips were definitely a big part of helping me achieve my dream retirement.

The post 2 top ways to invest for retirement appeared first on The Twelfth Magpie.

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Michelle Freeman owns shares in Rio Tinto. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

One way of boosting a meagre State Pension would be to own shares in dividend-paying companies. These regularly return a percentage of their profits to their owners, allowing the latter to enjoy their golden years in a bit more comfort.

Unfortunately, not all such stocks are created equal. Today, I’ll highlight a few things that investors need to look out for. 

1. A very high yield

Big dividend stocks understandably appeal to those wanting to top-up the State Pension. The bigger the yield, the more money they’ll receive, right? Not necessarily.

A seriously-high yield — found by dividing the predicted total dividend by the share price and then multiplying by 100 — is usually a red flag. More often than not, it’s due to a fall in a company’s valuation. The yield is high because the dividend is now larger, at least relative to the share price. 

Generally speaking, it’s best to start asking questions of any company/share paying over, say, 5%. A lot more than this and it’s usually just a matter of time before management announces a cut.

The lesson here is clear — always look under the company’s bonnet first. Is trading poor? If so, are dividends likely to be paid while it turns itself around? If not, steer clear.

2. No growth

A lack of growth in the amount of cash returned to shareholders over the years is another potential red flag. After all, a rising dividend implies rising profits and confidence on the part of management; a stagnant dividend suggests a company is treading water. Even a long period of hikes is worth investigating further if these barely cover inflation and do little to supplement your State Pension.

This is not to say investors should panic if dividends don’t rise every year. Sometimes, a firm may simply want to invest spare money back into the business, perhaps to capitalise on a new growth opportunity.

A metric worth following over time is the extent to which a company’s dividend is covered by profits (otherwise known as ‘dividend cover’). Anything less than 1x cover for too long is a warning sign. Dividends covered twice by profits is ideal.  

3. Shaky finances

The coronavirus pandemic has served to remind investors that buying shares in highly indebted companies can be a risky strategy. This is particularly the case for those seeking to top up their State Pension via dividends. The latter are often the first thing to be sacrificed in troubled times as firms try to preserve cash.

Any debt-heavy company showering its shareholders with money should be avoided like the plague, in my opinion. The only exception might be if earnings are very predictable, such as those of a utility or pharmaceutical giant. Which brings me nicely to my final point for anyone looking to top-up a State Pension.

One final thing worth checking is just how cyclical a business is. Does it do well in times of economic prosperity and poorly in periods when people are tightening their belts? Clearly, any income from companies in this category is vulnerable, even if they look financially sound for now. Spread your money around or avoid them completely.

The post State Pension: if you’re buying shares to boost it, here’s what you need to know appeared first on The Twelfth Magpie.

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• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Today I’m looking at a trio of FTSE 100 stocks that have informed the market of their intention to return cash to their owners. Thanks to their size and all-round resilience, I think all are worthy of consideration by those with one or both eyes on retirement.

Back on track

FTSE 100 paper and packaging group Mondi (LSE: MNDI) is first up.

Having withdrawn its final dividend of 55.72 euro cents per share back in April, the £7bn cap said earlier this month that it would now pay holders 29.75 euro cents for 2019.

It gets better. In addition to this payment, the company also announced a 2020 interim dividend of 19 euro cents per share. This is despite pre-tax profit in the six months to the end of June slumping 26% to €466m.

On a little less than 14 times estimated FY20 earnings, Mondi looks cheap in my book. The share price is still 35% below where it peaked in 2018, despite rising free cash flow and consistently decent margins and returns on invested capital.

Factor in the likely future growth in demand for sustainable packaging and I think this would be a great addition to any retirement-focused portfolio.

Defensive dividends

BAE Systems (LSE: BA) was my top pick for July. Since then, the shares have increased 9% in value. As pleasing as this is, the potential for capital gains wasn’t my prime motivation for highlighting the stock. Rather, it was the defensive qualities of BAE combined with the likelihood of the FTSE 100 giant confirming that it would reinstate its dividend. The latter has now happened. 

At the end of July, BAE’s management confirmed that a 13.8p per share cash return, once proposed and then deferred, would now be made to holders in September. On top of this, an interim dividend of 9.4p per share would be distributed in November to cover the first six months of 2020. 

According to CEO Charles Woodburn, BAE expects “a good second half to the year“. This is, of course, so long as we don’t get a significant second wave of the coronavirus. As things stand, group sales are expected to rise by “a low-single digit percentage compared to last year”.

Despite the subsequent rise in the share price, BAE still looks good value to me. The shares trade on 12 times forecast FY20 earnings. 

Viva Aviva

A third FTSE 100 stock that has restarted paying dividends is insurance firm Aviva (LSE: AV). Back in April, the company withdrew its dividend policy following guidance from the Bank of England.

This month, however, a second interim dividend of 6p per share was declared by management. Like Mondi, this is despite a heavy fall in pre-tax profit over the first half of 2020 (down 29% to a little under £1.1bn).

At 6 times forecast earnings, Aviva look priced for the apocalypse. However, prospective holders should know that the company still plans to review its longer-term dividend policy.

In practice, this will mean a lower but, importantly, sustainable payout. The remaining cash will pay down debt. Considering the latter is on par with the value of the entire company, this strikes me as entirely rational.

The post Dividends are back! Here are 3 FTSE 100 income stocks I’d buy for retirement appeared first on The Twelfth Magpie.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Royal Dutch Shell

When it comes to income, it’s hard to ignore oil giant Royal Dutch Shell (LSE: RDSB), in my view. Not only does the stock yield a colossal 6.3% right now (over four times the best interest rate you’ll find on a savings account), but the company hasn’t cut its dividend payout since World War II, due to the fact that it places a priority on rewarding investors with dividends. Given its focus on paying reliable dividends, the oil major is a key holding for large-scale pension funds, sovereign wealth funds, and private investors alike.

One reason I like Shell as a retirement income play, aside from its high yield, is that the company should not be impacted by Brexit. As a global energy group that has operations in 70 countries, the state of the UK economy is largely irrelevant to its fortunes. Furthermore, if the pound was to fall in the event of a no-deal scenario, Shell shareholders would actually get a boost because its dividend is declared in US dollars. I see this Brexit protection factor as a big plus.

Of course, there are risks to be aware of. For example, the world is slowly moving away from oil and transitioning to more sustainable fuels. This could impact the company over time. However, to Shell’s credit, it is actively taking steps to explore new opportunities in the renewables space, such as wind and solar power through its New Energies business, so it’s definitely looking to evolve. I’ll also point out that oil and gas are likely to remain important for at least a few decades.

Right now, Shell shares are trading on a forward-looking P/E ratio of 13.2, a little under the median FTSE 100 P/E of 14.8. I see that as good value. Given this valuation, and the brilliant yield, I see Shell as a great retirement income stock.

Imperial Brands

From a retirement income perspective, I also like the look of tobacco giant Imperial Brands (LSE: IMB). Tobacco stocks are very much out of favour right now, and as a result, there are fantastic yields across the sector. In Imperial’s case, the prospective yield on offer is a high 12.2%!

Of course, as a tobacco manufacturer, there are plenty of risks to be aware of with IMB. Around the world, smoking rates are declining and regulators are making life difficult for tobacco companies. However, as I’ve often said in the past, I don’t think it’s game over for big tobacco just yet. High population growth across Asia and Africa (where smoking is still very common) should offset declining smoking rates in the Western world, and companies can also up their prices to offset declining volumes. In addition, next-generation products (NGPs) and cannabis provide a growth angle.

Imperial shares currently trade on a forward P/E ratio of around 6.3, which is under half the median FTSE 100 P/E. At that valuation, I think the stock is a bargain.

The post Two FTSE 100 dividend stocks I’d buy for retirement income today appeared first on The Twelfth Magpie.

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Edward Sheldon owns shares in Royal Dutch Shell and Imperial Brands. The Motley Fool UK has recommended Imperial Brands. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

With that in mind, here’s a look at two dividend-paying investments trust that I believe are well suited to those looking for retirement income.

Murray Income Trust

The Murray Income Trust (LSE: MUT) is one that, as its name tells us, focuses on providing income for its investors. Its objective is to generate a high and growing income stream along with a little bit of capital growth. Rated four-star by research specialist Morningstar, it currently offers a yield of around 4% and pays out dividends quarterly.

There are a number of reasons I think the Murray Income Trust is a great retirement income pick. Firstly, it predominantly invests in large, dependable blue-chip companies. For example, its top holdings currently include the likes of Diageo, Unilever, BHP, and GlaxoSmithKline. So, it offers an element of stability. 

Secondly, I like the trust’s focus on income growth. This is an advantage from a retirement income perspective as income growth can provide protection against inflation. The trust has increased its dividend for 45 consecutive years now, which is an excellent achievement.

Finally, MUT has a solid performance track record, having outperformed the FTSE All-Share index over one, three, and five years (performance to 31 August). So, not only has it churned out fantastic dividends, it has also beaten the market. Overall, I see this trust as an excellent retirement income pick. Ongoing charges are 0.69% per year.

City of London Investment Trust

Another income-generating trust that I believe is well suited to retirees is the City of London Investment Trust (LSE: CTY). Like Murray, it has a four-star rating from Morningstar. Currently, it offers a yield of around 4.5% and it pays out dividends on a quarterly basis.

What I like about this particular trust is that the fund manager, Job Curtis, has a very conservative investment management style. This means it has sleep-well-at-night qualities. In my view, this makes the trust ideal for those who are looking for peace of mind from their investments in retirement. Top holdings currently include Royal Dutch Shell, Diageo, and HSBC.

This one also has a fantastic long-term dividend growth track record having now registered 53 consecutive dividend increases. One reason it has been able to do this is that it tucks excess income away as reserves so that if the dividend income from the companies it owns falls, the trust can still increase its payouts to investors. Over the last 10 years, it has also beaten its benchmark, the FTSE All-Share index, by a wide margin. 

Overall, given its solid yield and conservative approach to stock picking, I think CTY is a great choice for those seeking retirement income. Ongoing charges are low at just 0.39% per year.

The post Looking for retirement income? I’d consider these investment trusts that pay dividends appeared first on The Twelfth Magpie.

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Edward Sheldon owns shares in Murray Income Trust, City of London Investment Trust, Diageo, Unilever, GlaxoSmithKline, and Royal Dutch Shell. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline and Unilever. The Motley Fool UK has recommended Diageo and HSBC Holdings. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

I believe the best way to reduce the chances of making mistakes like these is to outsource your investing strategy.

Outsourcing

When I say outsource your investment strategy, I don’t mean pay someone else to manage your money for you. Instead, I think the best course of action for many investors is to buy a low-cost tracker fund and let the market do all the hard work.

Even the world’s best investor, Warren Buffett, advocates this approach. Back in 2013, he revealed that, upon his passing, he had instructed the trustee of his wife’s inheritance to put 90% of her money into a very low fee stock index fund and the remaining 10% into short-term government bonds.

Buffett’s approach is supported by cold hard numbers as well. Over the past 100 years, the S&P 500 has produced an average annualised return for investors in the region of 8%. Meanwhile, over the past three decades, the average investor’s portfolio has returned less than 3%.

Using the FTSE 100

The S&P 500 is an American index, but we do have a similar investment index here in the UK. The FTSE 100 is its UK’s alternative and the returns for this index over the past 10 years have been equally impressive. Since 2009, the UK’s leading blue-chip index has produced an average annual return of around 7%, including dividends.

That’s why I plan to use the FTSE 100 to help me retire early. I calculate that I will need around £30,000 per annum in income in retirement. According to my calculations, this means I will need to build a pension pot of between £750,000 and £1m before I can quit the rat race.

Making a million

A million-pound pension pot is quite a lofty target, but it’s possible to achieve. Assuming an average annual rate of return of 7%, I calculate I’ll need to put away £1,500 a month to hit this target in 23 years. It will take 30 years with a monthly contribution of £1,000.

So that’s how I plan to retire early using the Footsie 100. By using this leading blue-chip index to grow my money rather than investing myself, all I need to do is make sure I’m saving enough every month. Then, I just have to sit back relax and let the FTSE 100 do the heavy lifting.

This simple process might seem too good to be true, but as I’ve tried to show in the numbers above, it’s possible to make a million with the FTSE 100 and retire early if you are patient and save enough every month.

The post How I plan to retire early using the FTSE 100 appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

For example, a number of its members have dividend yields that are double or even treble the rate of inflation. As such, it may be possible to generate a high income return on a real-terms basis over a sustained period.

As such, now could be the right time to buy a range of dividend stocks within a portfolio. Doing so may provide a surprisingly high total return over the long run which helps to double your retirement savings.

Income appeal

While the income returns available on FTSE 100 shares may provide a generous passive income in retirement, they can also deliver a rising portfolio valuation when reinvested. Since the long-term total returns of the FTSE 100 may prove to be around 7% per year due to the existence of bear markets and downturns, obtaining a large proportion of this from dividends could mean that your holdings do not need to deliver a high rate of capital growth in order to produce market-beating total returns.

In fact, receiving dividends can lead to greater opportunities to invest during the most opportune periods in the stock market’s cycle. In other words, dividends received during bear markets can be reinvested in cheaper stocks that could lead to higher returns being achieved in the long run.

Defensive appeal

Many of the FTSE 100’s higher-yielding shares are companies that are mature and which operate in defensive industries. As a result, they may provide a degree of stability compared to stocks in the index that are more cyclical.

Given the risks facing the world economy at the present time, a defensive-focused portfolio could produce smoother and less volatile returns. Moreover, dividend payments from companies that are less dependent on the prospects for the wider economy may be relatively robust. This could lead to them offering greater consistency in their total returns, which ultimately produces a more impressive long-term investment outlook.

Furthermore, investors may adopt an increasingly risk-averse attitude over the medium term due to the risks faced by the world economy. Companies that are able to maintain dividend payments, and even produce dividend growth, during such periods may become more popular among investors. This may lead to a rise in their share prices.

Financial strength

A company that can afford to pay a rising dividend may offer improving financial performance in the long run. A growing dividend can suggest management confidence in a company’s outlook, as well as relatively sound financial standing. This can help to provide an investor with a more favourable risk/reward ratio that ultimately leads to higher returns.

As such, investing in large-cap dividend shares could not only reduce your total risk, but also lead to higher rewards. This may produce a larger nest egg from which an income can be drawn in retirement.

The post Why I think FTSE 100 dividend shares could help to double your retirement savings appeared first on The Twelfth Magpie.

More reading

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• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Peter Stephens has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Indeed, many high-earning individuals live from paycheck-to-paycheck because they don’t keep an eye on their money. So, with that in mind, I’m going to explain the three simple things I’m doing right now to retire wealthy.

Save before spending

When it comes to saving, one of the biggest mistakes most people make is not saving enough. To get around this problem, I save my money at the beginning of the month, and then spend what’s left over.

Tucking money away safely before you get a chance to spend it is a great way to make sure that you are saving and not overspending. It also forces you to keep a closer eye on your finances and where the money’s going. You might have less money to spend every month, but that means you’ve got more time evaluating whether or not the spending decisions you’re making are the right ones.

Invest in yourself 

The best way to build wealth over the long term is to invest your money (more on that later). I’ve lost count of the number of high-earning individuals who’ve told me they just can not be bothered to spend their time trying to get to grips with investing. This is probably one of the most costly mistakes you’ll never make if you want to retire wealthy.

Today, there are hundreds of books out there explaining the basic concepts of investing, and they don’t cost an arm and a leg. There are thousands of personal finance books available online for less than £10 each. This small capital outlay could potentially be worth hundreds of thousands of pounds in investment returns over the long term and could be the best investment you will ever make. Some of the investment books I own have paid for themselves many times over.

Invest for the future

As I noted above, investing your money is one of the best ways to grow your wealth. However, many savers ignore this route because they think it’s too complicated or too risky. 

The fact of the matter is, investing isn’t particularly risky if you’re investing for the long term. We don’t know what the stock market will do in one, two, or five years. But we can be sure that over three or four decades, the market will trading at a higher level than it is today.

For example, over the past 100 years, the UK equity market has returned around 5% per annum after inflation. This time frame includes two world wars, two severe economic depressions, and a handful of recessions.

Over the past decade, the Footsie 100, the UK’s leading blue-chip index, has produced an average annual return of around 10%. At this rate of return, you’d double your investment every 7.2 years, without taking on too much risk. You can’t ignore this kind of performance if you want to retire wealthy.

The post 3 things I’m doing today to retire wealthy appeared first on The Twelfth Magpie.

More reading

• The £15bn defence splurge that could send UK shares soaring in July
• Up 446% in 12 months! What’s next for the Ceres Power share price?
• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• Up 132% and surging, how is this FTSE 250 share STILL so cheap?

Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

If the thought of trying to survive on that amount of money in retirement worries you, it’s a good idea to take action, sooner rather than later. Here are three things you can do immediately to boost your chances of enjoying a comfortable retirement.

Track down old workplace pensions

One of the first things you should do if you’re serious about getting your retirement savings sorted is to work out if you have any old workplace pensions that you have lost track of.

The average person today has over 10 jobs in their career, so there’s a chance you may have had pensions with past employers and forgotten about them. Indeed, according to research from the Association of British Insurers (ABI) and the Pensions Policy Institute (PPI) last year, there are around 1.6m ‘lost’ pensions in the UK, worth a staggering £19.4bn, or around £13,000 per pot.

If you do have any workplace pensions that you have lost track of, it’s definitely worth tracking them down. You could have substantial pension savings you don’t even know about.

Consolidate your pensions

The next smart move is to bring together any old pensions accounts and consolidate them into one account. By having all your pensions in one place, you’ll have far more control over your money, and managing your retirement pot should be easier as you’ll have a much clearer picture of your overall pension savings.

An easy way to do this is to open a Self-Invested Personal Pension (SIPP) with a financial services provider such as Hargreaves Lansdown or AJ Bell and transfer all your old pension accounts into your new account. This is a simple process that is usually just a matter of filling out a few forms.

I’ll point out here that in some cases, a pension consolidation may not be the best move. For example, if you are a member of a defined benefit pension scheme you may be better off staying in it. If in doubt, speak to a financial adviser or pensions expert.

Get saving and investing 

Finally, putting a regular savings and investing plan in place is also a very smart idea. Put a savings plan in place early enough, and invest your money in the right assets, and you could potentially build up a portfolio which generates a nice little additional retirement income stream to supplement your State Pension income.

And don’t forget about ‘tax relief’ – if you save into a SIPP account, the government will top up your contributions. 

The post Worried about your State Pension retirement income? Here are 3 things I’d do immediately appeared first on The Twelfth Magpie.

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Edward Sheldon owns shares in Hargreaves Lansdown. The Motley Fool UK has recommended Hargreaves Lansdown. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.