3 practical reasons to check your State Pension forecast before you retire

08 May 2024

The State Pension is often a useful foundation when you’re creating an income in retirement. Yet, a survey from Just Group found that a third of people didn’t check their State Pension forecast before stopping work.

While the State Pension might not be your primary income in retirement, it’s often valuable because it’s reliable – you’ll receive a regular income when you reach State Pension Age for the rest of your life. In addition, under the triple lock, the State Pension also increases each tax year, which could help maintain your spending power throughout retirement.

So, if you’ve been neglecting your State Pension, it might be worth giving it some attention. Here are three practical reasons to check your State Pension before you retire.

1. The State Pension Age is rising and could be later than you expect

The State Pension Age is the earliest date you can claim your State Pension, and it depends on when you were born.

Currently, the State Pension Age is 66 for both men and women. However, it is slowly rising. For those born after 5 April 1960, there will be a phased increase in State Pension Age to 68. So, the date you can claim the State Pension might be later than you expect.

While further increases haven’t been announced by the government, there are expectations that the State Pension Age will rise again in the future as life expectancy increases. Indeed, the International Longevity Centre calculates the State Pension Age will need to rise to 71 by 2050 to maintain the current ratio of workers to retirees. 

Checking your State Pension forecast before you plan to retire could help you avoid a potential financial shock if you can’t claim it when you expect. 

2. You might want to fill in National Insurance gaps to increase your State Pension

In 2024/25, the full new State Pension is £221.20 a week – more than £11,500 a year. However, to receive the full amount, you will normally need to have made at least 35 qualifying years of National Insurance (NI) contributions. If you have fewer qualifying years, you’ll often receive a portion of the full amount.

If you’re not entitled to the full new State Pension due to gaps in your NI record, you may be able to buy additional years. In some cases, this could boost your income during retirement.

Typically, a full NI year costs £824 and could add up to £302.64 each year to your pre-tax State Pension income. So, you may not need to claim the State Pension for long before you benefit financially.

Before you fill in the gaps, you may want to consider your retirement plans. If you’re still several years away from retirement, you might reach the 35 qualifying years you need without making voluntary contributions.

You can usually only fill in the gaps in your NI record for the last six tax years. So, checking your State Pension forecast before you retire could identify a way to boost your income.

If you want to make voluntary NI contributions, you’ll need to contact HMRC to get a reference and find out exactly how much filling in the gaps could cost you. 

3. Your State Pension could affect your wider retirement plan

Understanding how much you’ll receive from the State Pension and when you can claim it might play an important role in your wider financial plan.

While the money you receive from the State Pension might not be your main source of income in retirement, it could provide a useful foundation to build on. By factoring it in, you might find that you’re on track for a more comfortable retirement than you expected, or that you could afford to withdraw a lump sum from your pension at the start of retirement to tick off bucket list items.

Checking your State Pension forecast could mean you’re in a better position to make retirement decisions, including how you’ll use other assets to support your lifestyle goals.

You can check your State Pension forecast quickly online

Checking your State Pension forecast is often simple. You can use the government tool here or the HMRC app. You can also contact the Future Pension Centre if you’d prefer to receive the information by post, so long as your State Pension Age is more than 30 days away.

Get in touch to talk about your retirement income

The State Pension is often just part of the income you’ll receive in retirement. We could help you create a retirement plan that brings together the different sources of income you might have, including workplace pensions, annuities, investments, property, and more.

Please contact us to talk about your retirement plans and the support we could provide as you prepare for the next chapter of your life.

Please note: This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

A pension is a long-term investment not normally accessible until 55 (57 from April 2028). The fund value may fluctuate and can go down, which would have an impact on the level of pension benefits available. Past performance is not a reliable indicator of future performance.

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