Planning for retirement is one of those things that many of us put off, as we always have better things to pay out for. When we’re busy living in the here and now we often don’t think about our financial future. But if you were to envision yourself at the age of 70 still working and having to scan supermarkets at the end of the day for discount foods, you may think again!
Plan for retirement sooner rather than later. It may not be something you consider if you’re in your twenties, yet if you put off adding funds to a pension for another ten years, you will have to double the amount you put in in order to make up for the shortfall. Even if you can spare a small amount early on towards a pension fund, this will have time to accrue interest.
What action you take now toward planning for retirement will depend on your age and how far away you are from retiring. Here are the different ways you can help fund your retirement depending on the stage in life you’re at.
In your 20’s
The last thing you may think about when you get your wage at the end of the month is to put some away for retirement. Moving out of your parents, buying a car or going on holiday may well be the priority. Yet you can help your financial future by firstly clearing away any debt you have – be it a student overdraft or credit card debt. Once you’ve done that, if you have even £20 a month to spare, put this into a tax-free ISA until you decide on which pension to put it into.
In your 30’s
Your 30’s may be a busy decade financially as people get married, buy houses and may have children. So putting money aside may become difficult. The best thing to do is check whether your company offers a pension scheme. Company pension schemes are great especially when employers contribute. Some will double or triple what you put in each month, so it’s like a pay rise! Having pension funds get automatically taken out of your wage are a good idea as it forces you to save.
In your 40’s
Now is the time to be thinking seriously about retirement, especially if you’d like to retire in your 50’s. You are probably earning more than in your 20’s and 30’s so dedicate some of that extra cash to a pension plan.
In your 50’s
At this time in your life you should be maximising your pension contributions. If you haven’t already, decide the age at which you’d like to retire. If you have previously invested in different schemes, it’s a good idea to see whether these schemes are working the best they can for you. Now is the time to re-access whether your money is working hard for you.