Why You Need To Start Saving for Your Pension – Now
In our youth, many people forget to even think about setting up a pension, as when pension age seems so far away, it is usually tempting to concentrate on how to handle your cash in the here and now. But the younger you are the better, because the later you begin saving, the more catch up you’ve got to do, and the harder it’ll be.
State pensions in the UK currently stand at the maximum of £97.65 per week (how much you will receive is dependant on the national insurance contributions you have made throughout your working life). Even with the maximum state pension, this is barely sufficient to cover a basic standard of living, not to mention the comfortable retirement you should be due.
If you want more than to struggle by on the basic essentials you should start considering your retirement now .
At the age of 25 if you decide to pay £100 per month into a pension plan, it’s possible that you could be eligible for a yearly income of £12,000. If you were to leave it much later you will need to put away much more monthly to get a similar level of income.
When planning to start a pension, you might want to consider doing the maths, so you can establish the amount of money you are going to require upon retirement. Look at the sort of lifestyle you wish to lead post-retirement, and just how much money each year you’ll ideally like in order to finance that lifestyle. In an ideal world you’ll own your property outright by retirement age, which means you won’t need to worry about mortgage repayments or rent, but don’t forget the cost of maintenance on a home, and the fact that as a house ages, maintenance costs may increase. But remember the amount you spend on utility bills may rise significantly over the years.
Should you own a very large property (with the mortgage paid), and would be happy to downsize on retirement, then a smaller pension fund may be enough, because the income produced from the sale of your house should supplement your pension significantly. However, you do need to think about that while you currently feel that you’d be happy to downsize, when it comes to actually moving, you could realise that you’re more attached to your property than you previously realised.
There is also the option to obtain a pension release before retirement. A pension release is where you can acquire up to 25 percent of your pension fund completely tax free, ensuring that less of your pension is going to be taxable following retirement. However, if you don’t begin saving as soon as possible, you won’t have the funds accessible to even think about a pension release. However the solution is simple – start saving now, so as you get to the end of your working life, you can relax, safe in the knowledge that your remaining years will be some of the best.
This post was written on behalf of Robert Bruce Associates, experts in pension release. For more info on pension release please visit My Pension Release.
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Tags: financial planning, pension
