Three questions to ask during your next pension review

While pension reviews are often focused on contributions, investment performance and retirement projections, they can also provide an opportunity to look at the wider financial plan that supports those goals.

After all, a pension only works as intended if you're able to continue earning, saving and contributing throughout your working life.

That's why there are three important questions worth considering during every pension review:

1. What happens if I live to retirement?
2. What happens if I can't work?
3. What happens to my loved ones if I die before retirement?

1. What happens if I live to retirement?

Most people hope to enjoy a long and comfortable retirement. However, achieving that goal requires more than simply reaching retirement age. It also requires having enough income to support the lifestyle you want once you stop working.

While the State Pension provides valuable support, many people will need additional retirement savings to help achieve the lifestyle they hope to enjoy in retirement.

A pension can help provide the income needed to support you when your working years come to an end. The earlier you start saving and the more regularly you contribute, the greater the opportunity for your pension to grow over time.

The right retirement plan will depend on your individual circumstances, including your desired retirement age, retirement goals and attitude to investment risk. This is why reviewing your pension regularly and seeking financial advice, where appropriate, can be an important part of long-term financial planning.

Preparing for retirement remains the primary purpose of a pension. However, a pension only works as intended if you're able to continue earning and making contributions along the way. That raises an equally important question: what happens if illness or injury prevents you from working before retirement?

2. What happens if I can’t work?

While reaching retirement is an important goal, the road towards it is equally important. A comfortable pension pot is built through pension contributions made consistently over many years. Every contribution you make depends on your ability to earn an income. That same income also helps pay for everyday living expenses, mortgage repayments and other financial commitments.

Most of us expect our income to continue until retirement. However, illness or injury can sometimes disrupt those plans. If you're unable to work for an extended period, the financial impact can extend far beyond your immediate expenses. It may also affect your ability to continue saving towards your retirement goals.

State benefits can provide valuable support, but they may not be enough to maintain your current lifestyle or meet all your financial commitments. This is where Income Protection can play an important role.

Income Protection helps replace lost earnings when illness or injury prevents you from working. It allows you to focus on your recovery rather than facing immediate financial pressures. Income Protection may be provided by your employer, but it is also possible to take out cover in your own name.

You can think of Income Protection as an insurance policy for your financial plan. By protecting the income that makes retirement planning possible, it helps safeguard not only your current lifestyle but also your long-term financial objectives.

Which brings us to the third and final question: what happens to your loved ones if you die before retirement?

3. What happens to my loved ones if I die before retirement?

Most retirement plans are built around the assumption that we will enjoy a long and comfortable future. While nobody likes to think about dying before retirement, it is important to consider what would happen to the people who depend on us financially if the unexpected were to occur.

Just as illness or injury can disrupt a retirement plan, dying before retirement can have a significant financial impact on a family. Mortgage repayments, rent, household bills and everyday living expenses will still need to be met. Longer-term goals, such as funding a child's education or maintaining a family's standard of living, may also need to be considered.

This is where Life Cover can play an important role. It can help provide financial security for your loved ones by providing a lump sum payment if you die during the term of the policy.

Many people already have some level of protection in place through arrangements such as pension death benefits, death-in-service benefits, Mortgage Protection or other life insurance policies. However, having some cover does not necessarily mean you have enough cover. For example, Mortgage Protection may be sufficient to clear an outstanding mortgage, but it may not provide enough financial support to help protect your family's lifestyle or future plans.

Reviewing your life cover alongside your pension can help ensure your financial plan is designed not only for the future you hope to enjoy, but also for the financial wellbeing of the people you care about most.

How financial planning can help

Retirement planning is about more than preparing for life after work. It is also about protecting the plans you're building along the way.

By considering these three questions during your next pension review, you can gain a clearer understanding of how resilient your financial plan really is, both for you and for the people who depend on you.

Looking at retirement planning, life cover, specified illness cover and Income Protection together can help identify potential gaps and provide a more complete view of your financial wellbeing.

Speaking to a financial broker or a Zurich financial advisor can help you understand whether your existing arrangements continue to meet your needs and support the goals you have for yourself and your family.

This publication has been prepared for general guidance on matters of interest only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice.