Regret is a common experience, but it’s crucial to avoid pension-related regrets as they can significantly impact your financial well-being in retirement. A survey by Hargreaves Lansdown revealed that 39 percent of retirees regret their pension decisions.

Three percent wished they had monitored their investments more closely, ten percent regretted not increasing contributions earlier, and fifteen percent wished they had planned their retirement sooner.

So, what are the key regrets, and how can you avoid them?

One prevalent issue is inadequate savings for retirement. Under auto-enrollment, employees aged 22 and over, earning more than £10,000 annually, contribute to their workplace pension, but experts suggest that the minimum contributions are insufficient for a comfortable retirement.

According to the Pensions and Lifetime Savings Association (PLSA), a single individual needs an income of £31,300 a year post-tax for a moderate lifestyle, while a couple requires about £43,100 annually. To achieve this, starting to save early is vital. For instance, to reach a pot of £494,000, a 20-year-old needs to save £298 a month, whereas a 40-year-old needs to save £840 monthly.

For a comfortable retirement, defined as £43,100 a year for a single person and £59,000 for a couple, the required pot is £794,000, with respective monthly savings of £479 for a 20-year-old and £1,352 for a 40-year-old.

Many workers are not on track for this moderate lifestyle, with only 20 percent prepared adequately. Incremental increases in contributions during pay raises can significantly boost your pension pot, suggests Helen Morrissey from Hargreaves Lansdown.

Paying Excessive Fees

High fees can erode your pension savings. Fund management, pension administration, and financial advice can all add up, affecting your investment returns. Annually, Brits pay an average of 1.9 percent for advisory and portfolio charges, according to the Financial Conduct Authority.

It’s crucial to compare fees from different providers. Vanguard offers a competitive 0.15 percent platform fee for a £100,000 investment. Interactive Investor charges a flat fee plus transaction costs, potentially saving more for larger pension pots.

Assess your investment strategy periodically. Many workplace pensions automatically shift investments to safer assets like government bonds as you near retirement, a process called de-risking. Opt for a higher growth fund or adjust your retirement date if you prefer.

Lack of Planning

Proactive planning is essential. Begin considering your retirement finances at least ten years in advance. Factor in your workplace pensions, savings, investments, and state pension to estimate your retirement income, advises Gianpaolo Mantini from Saltus. Downsizing your home may also free up additional funds.

Planning how you’ll spend your time in retirement is equally important, reducing the risk of boredom and enhancing quality of life, Mantini notes.

Withdrawing Money Prematurely

While you can access your pension from age 55 (57 from April 2028), early withdrawals can have long-term consequences. Stephen Lowe from Just Group warns against the temptation of immediate access, noting the benefits of tax-free growth if funds remain invested.

Consider taking out your 25 percent tax-free lump sum in stages. For a £400,000 pension pot, phased withdrawals can increase the total amount taken due to continued investment growth.

Leaving your pension untouched for as long as possible also has inheritance benefits. Pensions typically fall outside your estate for inheritance tax purposes, allowing tax-free withdrawals for your beneficiaries if you die before 75.

Some individuals prioritize using other savings or selling assets before accessing their pension to maximize these benefits, notes Jason Hollands from Evelyn Partners.

Regaining Control

Taking charge of your pension can yield significant savings. Robert Trott, 54, reduced his annual pension management fees from 1.88 percent to about 0.22 percent by switching to a low-cost fund through Interactive Investor. He now saves thousands annually and encourages others to consider managing their investments.

Understanding the fees and investment strategies associated with your pension can significantly impact your retirement savings and lifestyle.