Anyone saving into a workplace or private pension is at risk of missing out on as much as £10,000 unless they check their dates now.
That’s what Martin Lewis has told viewers of ITV’s Good Morning Britain, after the dangers of having the wrong retirement date set up were revealed.
“Millions could be affected and could potentially lose out on thousands of pounds because they have the wrong retirement age,” the Money SavingExpert.com founder said.
The problem comes because retirement savings don’t work quite like a standard savings account.
Because you need the money to last your lifetime, and markets crash sometimes, as you get nearer to your scheduled date they take less and less risk with it.
Sadly, that typically comes at the expense of returns - meaning less cash for you overall.
“But if your retirement age is set wrong then you move into these lower risk funds too early - usually 15 years before you’re due to retire,” Martin said.
Aviva worked out that an average earner in their company’s automatic enrolment pension could miss more than £4,000 in their pension pot by using a default retirement age of 65, but then actually retire at 68 - the current state pension age for under-40s.
By contrast, if they put their age at 60 - the old state pension age for women - they would miss out on almost £9,900 if they worked on to the current one.
And as the recent court case around women’s pension age shows, a lot of people don’t know when they’re due to get their state pension.
“Go to your scheme and check what your retirement age is, and if it’s wrong, change it. It’s as simple as that,” Martin said.
As to what age you should pick, it’s simplest to choose the state pension age - unless you’re confident you’ll have enough to quit work early and live on your savings alone for a few years.
If you’re not sure what your state pension age is, you can check it here .
