Retirement income has surged since 2001, with Resolution Foundation highlighting that pensioner households lived on £70 less every week 20 years ago. Yet many are still looking to add even more into their pension pots and Which? shared the easiest ways to do so before and during retirement.
If one doesn’t transfer their pension pots, they’re often left with a trail of small sums and are unsure of how much they actually have invested and whether the charges they’ve paid are reasonable.
At the start of retirement
One of the most important times to set spending, saving and withdrawal strategies is at the start of one’s retirement, so boosting retirement income here can be incredibly beneficial.
Defer state pension when possible
If one qualifies to receive state pension, but doesn’t need the money at the start of their retirement, deferring it to a later date can boost their pension pot the longer they wait to claim it.
This is also incredibly easy as the UK government immediately assumes state pension is being deferred if it is not claimed.
Which? explained that by doing this, one can boost their state pension by one percent each week for every nine weeks they defer it, which is the equivalent of 5.8 percent per year.
Options for generating retirement income
There are a multitude of options available for generating retirement income, such as annuities, income drawdowns or tax-free lump sum. Ensuring one chooses the option that will best fit their lifestyle needs and retirement goals can boost their retirement income.
If a retiree has health issues they may qualify for a potential 50 percent rise in their annuity income, as insurers set their annuity rate based on how long they believe a retiree will live; having medical issues that impact one’s life expectancy can see them being offered a better rate.
The rent-a-room scheme can see homeowners earning up to £7,500 every year completely tax free by letting out an empty room in their home.
Renters can also take their share of this opportunity by subletting a property so long as they have their landlord’s permission.
Renting out other assets, such as parking spaces in busy cities, can be one of the easiest passive incomes for retirees and they can earn up to £1,000 tax-free.
Another income covered by the personal tax allowance is online trading where retirees can earn £1,000 tax-free.