Start planning for retirement now!
In a recent survey conducted by LaterLife, (a Jelf company) they found that 43% of people over 55 had given no thought to their retirement finances at all!
Most people have a desire to retire at some point, so it’s worthwhile giving it some thought, especially if you’re over 55, but it’s a good idea to start thinking about it as early as you can. In the same survey, they found that nearly 1 in 5 people over 55 intend to keep working until they physically can’t anymore – is that what you want to do?
What’s more is that the State Pension Age will most likely continue to increase, so if you do retire before you reach that age you will need some savings to live on. Although you may have decades until you stop working, the positive news is that you also have decades to save. And it’s important to start saving early because you could live for many years after you retire!
Here are a few small steps you can take now to help you be better prepared for retirement:
Start saving nowThe earlier you can start investing, the better. As you progress through your career, you can increase your contribution gradually. Waiting until you are older, will most likely result in higher contributions needed to compensate for the ‘missed’ years.
Investigate your company pension schemeIt’s also worthwhile looking into what your company pension offers you, because your employer will contribute into that too – so you get extra savings on top of what you can afford to invest! You also benefit from tax relief on your personal contributions paid to a pension, resulting in more money going in to your pension than you would have if you just took the money as salary and then put it into another savings vehicle. If you’re not eligible for a company pension scheme, there are other savings options you can look into.
Think about what you might want to do in retirement
You may not want to think about retirement, or you may think it’s too far away to consider now. If you don’t think about what you want to do in retirement, then you can’t really get a good idea of what amount you need to save. Will you be doing the same things you’re doing now? Will you want to go travelling more or visit family? Thinking about this now enables you to have an understanding of what your retirement may cost and how much you need to save.
Use online tools
There are many online tools that you can use to work out how much you will need to save in your pension to get a rough annual amount that will support your retirement lifestyle. You may have access to tools like this via your company pension scheme so you can see exactly what you’ve got and what you can expect.
There are however other options available than just taking an annual income and it depends on what you want to do as to what might be best for you (see point 5).
Get some guidance
There are different ways you can save for retirement and different ways to take your savings when you do retire. If you’re worried about it, confused or you feel like you might need some professional help, see what support options your employer offers. Many employers now offer education specifically on pensions so find out what assistance is available.
Don’t forget about it!
Once you start saving it’s easy to forget to review it, but don’t! You need to review your retirement savings regularly to assess whether you are on track. It is good practice to also check on your other finances to see if you could afford to save a little more into your pension. Maybe you could cut back on some non-necessities to help you put more towards your future!