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In the UK, we are living longer than ever before, and with that comes the need to plan for our financial future. One of the best ways to ensure financial security in retirement is by saving into a private pension.

A million has always been a good number for individuals to work towards. The previous lifetime tax-free allowance was capped at £1.074 million – though the Government has announced plans to abolish the cap. Though it might seem ambitious, with the right planning (and a decent annual income) it is perfectly possible to become a pension millionaire.

Thanks to the auto-enrolment of workplace pensions, the number of people who hold a private pension has increased. However, saving the minimum amount into a standard workplace pension might not be enough to achieve your retirement goals.

£1 million might sound like a lot of money, but it’s not as much as you might think. If you retire at age 65 and live until age 90, a pension pot of £1 million would provide an annual income of around £40,000. Traditionally, the safe withdrawal rate from a pension was 4% however, this varies from person to person depending on individual circumstances. Make sure you’re talking to a financial adviser to work out what’s best for you.

So, if you want to be a pension millionaire, what do you need to do?

Know what you need to finance your goals
Depending on your age, there may well be changes to the state pension before you become entitled to receive it. For planning purposes, it can be useful to assume that you’ll receive nothing from the state pension so that when you do get it, it’s a bonus rather than something you desperately need.

Instead, consider the income you’ll need to live comfortably – the way that you want to – once you have retired. Think about big expenditures too, will your pension need to cover part of your mortgage, for example? Work backwards to determine how much you need to save.

Remember that time is ticking
It’s easy to think of a pension as something to worry about in the future, but the sooner you put your plans into action, the better off you’ll be. Delays in investment can cause a large reduction in funds.

If you start paying into your pension aged 30, for example, with £10,000 a year invested, the projected fund available at 60 would be £461,000. If you started paying in aged 35, you’d only have £358,000 available. Delay it another five years, waiting until aged 40, there would only be £266,000 in the pot.

Starting as early as possible is the best way to make your money go further.

Make the most of the new annual allowance
For the next tax year, the annual tax-free pensions savings allowance will increase from £40,000 to £60,000. This won’t be possible for everyone, but if you are a limited company director, this can be a great way to quickly build your pension provisions and reduce your tax bill at the same time. A win-win.

Get advice from experts
Saving more than £1 million is no easy feat. It’s important to get the right advice from someone who understands your goals and can help you to achieve them. Our initial appointments are no obligation and fee-free, so you have absolutely nothing to lose (and perhaps a lot to gain!) by getting in touch.

Though pension planning is often about long-term saving, the best strategies and investments can change, so it’s important to conduct regular reviews of your pension and retirement plan.