5 ways you can still build up a decent retirement fund in your 40s

For most people in their 40s, retirement seems a distant dream, but you may have started to think about your pensions and how much money they have built up.

It’s estimated that the average person will need over £300,000* in retirement funds if they are looking to retire at 65.

So, what if you’ve reached your 40s and you only have a small amount of pension funds built up? Will you have to work forever? Whatever your concerns, all is not lost. You can still get a substantial retirement pot, by the time you come to retire.

Here are five tips for growing your retirement fund in your 40s.

1. Track down any small pensions and ISAs

Tracking down any old workplace pensions or personal ISAs is a great place to start sorting out your finances. You may have worked for several companies and have a few small old pensions that you have lost track of. If you have any old paperwork, dig it out and contact the pension company for an updated valuation. No paperwork? then contacting your past employers and asking what company the pension fund was with, should help you track down your money.

You could be in for a pleasant surprise – there’s an estimated £400 million in unclaimed pensions~, and this could be some of your money – so a bit of investigating can help make your retirement funds look a little better.

2. Review your pension’s performance

Once you have tracked down all of your pension funds, it is definitely worth reviewing their performance over the last few years. Many older pension funds charge high fees and have hidden charges that could be affecting your investment growth. Our Pension Calculator can quickly show you the differences between high fees and low fees and how much your pension could be worth when you reach 65.

A Pension Review will also ensure your personal pension is suitable for your attitude to financial risk and you’re not in a risky fund that you may be uncomfortable with.

3. Merge your pensions into one fund

To make planning for retirement easier, having your pension funds in one or two main policies could be ideal. Moving your old workplace pensions together (called Pension Consolidation) rather than having them scattered around can give you a quick idea of how much money you have built up, if your pension pots are growing, plus could save you money in management fees.

High management fees and hidden charges can have a significant impact on your future funds – especially if your pension policy’s growth is weak and you’re not contributing regularly. Always keep in mind that combining your pensions might not be suitable for everyone.

4. Assess what you can afford to contribute

When you have a clear idea of where your pension funds are and how much they total, it’s a good idea to assess your financial situation and work out how much extra you can afford to contribute to your pension regularly. Even a small increase in contributions above your auto-enrolment pension can have a considerable impact on your funds over a period of time.

5. Keep your pension contributions up

You probably have other more pressing or exciting things to spend your hard-earned wages on and it can be very easy to cut back on your pension payments, but if you’re just starting to build up your pension pot in your 40s, you’re going to have to cut back on those little luxuries in order to make sure you have a comfortable retirement. A full state pension currently is only worth just over £165 per week, so it is vital to start making regular contributions to your personal pension.

There’s still plenty of time left, to build a decent retirement fund, and you may only have to tweak your lifestyle to make a significant change. After all, some small changes today can mean significant pension savings and don’t forget pension contributions are tax-free.

Our final tip would be, don’t give up hope, you can still build up a good retirement fund and enjoy a comfortable future.

For advice on Pension Consolidation or Pension Performance reviews, contact Pension Works today on 0808 164 2664.

* Which? Jul 2019 How Much Will You Need To Retire?
~ Express.co.uk Jan 18 Savers have lost £400 million in old pension pots