It’s never too early to start saving into a Pension
Since it’s unlikely that the State Pension alone will provide you with an affordable retirement, it’s important to plan out additional sources of income for your retirement years. Having your own Private Pension can provide this but it takes some planning. And there’s no reason why you can’t have more than one Private Pension.
Here are some pointers to consider –
1 – Starting your pension early will really pay off. You should start saving for retirement as early as possible, as the sooner you begin the longer your savings have to grow. While other financial challenges can make this difficult, investing regular amounts in a pension throughout your working life gives you the best chance of enjoying a prosperous retirement.
2 – But better late than never ! Never think it’s too late to start saving for your retirement. The favourable tax treatment pensions enjoy and their potential for investment growth means any contributions you make later in life can still make a huge difference to your standard of living in retirement.
3 – Joining a Workplace Pension. Companies are now required by law to operate a Workplace Pension scheme for their staff, and this is designed to be one method of taking out an additional pension. So if you’re aged 22 or more and earning at least £10,000 pa, you’ll be invited to join the scheme by your Employer. This offer is well worth taking up since as well as you making your own contribution each month, the business will also pay into your pension pot, plus you’ll get tax relief. All in all this is too good an opportunity to miss and your employer will give you more details.
4- Retirement planning is vital for the self-employed. As the self-employed are inevitably responsible for their own pension provision, it’s particularly important that this section of society takes full control of their retirement planning. So if you belong to the growing band of self-employed workers make sure you don’t delay saving for your retirement.
5 – Keep track of how your pensions are doing. It’s good to regularly review your pension arrangements to ensure they continue to meet your retirement objectives. Your pension provider(s) will send out annual benefit statements detailing your entitlements and you can also request a State Pension forecast. This information will allow you and your Financial Adviser to assess your provision and discuss whether you need to take further action, for instance, increasing contributions or setting up an additional pension. Many people only review their pensions when they’re about to retire, by which time it’s too late – don’t fall into this trap.
6 – Plan your inheritance. It’s important to plan what will happen to your pension benefits if you die. Passing on your pension wealth is now relatively easy and some pensions can be inherited tax-free. It’s therefore essential that you keep your beneficiary nomination forms up to date as your providers will use this information when deciding who will inherit your pension savings.
7 – Take control of your retirement. When you reach 55 (57 from 2028), it’s important to carefully consider what you can do with your pension pot. For instance, you could:
- keep your savings invested;
- take a cash lump sum;
- draw a flexible income (drawdown);
- buy a fixed income (an annuity),
- or do a combination of these things.
While this flexibility may enable you to retire earlier or semi-retire, it’s vital you take full control of your retirement options at this stage. This should include seeking advice and discussing the pros and cons of the different avenues available to you.
How we can help
Retirement planning is never a case of ‘one size fits all’; so it’s vital you obtain sound financial advice tailored to your individual needs. We offer advice and help with all aspects of pensions and retirement planning, whether you’re just starting out and want help choosing the most appropriate pension products, or you’re approaching the stage of life when you need to utilise your pension pot and want to know the most efficient way to access your funds. Call us now on 0808 123 4321 to arrange an initial meeting at our expense.
Logic Wealth Planning provides independent financial advice in Manchester, Bury, Rochdale, Cheshire, and the surrounding area, but not limited to the region.