HomeBreaking NewsWhy you need to think about saving for retirement

Why you need to think about saving for retirement

Summary

RETIREMENT planning – it’s overwhelming, right? Thinking about it is probably right up there with clearing out the garage or rewriting your CV.

Yet getting organised and ready for the future is nowhere near as daunting, time consuming or difficult as you might think. And guess what? It actually feels good taking control. It’s the best way to make sure you get the retirement you’d like, be it relaxed and chilled, or a whirlwind of travel and new experiences.

Ollie Cowan, 29, is happy to be saving for his future

Whatever your preference, now is the best time to start taking stock of your situation, even if retiring seems a long way off, or you feel like you’ve got everything sorted already.

So set aside just an hour today, tomorrow, this week, to see where you’re at – it’s always something that’s worth doing.

Knowing your retirement plans are on the right track feels great, says workshop manager Ollie Cowan, 29, from Wall, Northumberland.

Ollie, a single dad to Libby, eight, and Esmae, five, was automatically enrolled into his workplace pension and he’s happy to be saving for the future.

“This is my first full-time job with a workplace pension,” says Ollie. “I’ve got two little girls and everything I do is for them. It’s for the girls, not for me.

“I know that if it was cash in my bank account, it would get spent. But when money goes into a pension, it means I’ve put it to one side and I know I’m doing something about my financial security for when I retire. That means I will be able to put any other savings or money leftover towards giving the kids security for college or university, to get a foot on the property ladder, or anything that they need.”

He says experience has taught him to plan ahead. “Trying to get on the property ladder myself, I know how hard it is. And if it’s hard for me now, imagine how difficult it’s going to be for the kids in years to come. I want to be able to do my bit to help, and not have to spend every spare penny on simply paying for my daily living costs because I didn’t put enough aside for retirement when I was at work.”

Plus, if people opt out of workplace pension schemes, they are missing out on employer’s contributions, adds Ollie.

“You’re missing out on free money, basically,” he says. “But for me, it’s the future financial security that matters above everything. I am happy to put the time in now to be more secure in the future. With the workplace pension, I put it in place and then I can keep checking on the figures.”

So where should you begin? Checking in at yourpension.gov.uk is a great starting point. The website has lots of helpful tips and tools to help you plan for the retirement you want. It’s free, quick and straightforward – you can make a start while you have a cuppa.

You can check your State Pension forecast via gov.uk/check-state-pension. The current full rate of the new State Pension is £179.60 per week, or around £9,300 a year. Your forecast also shows you how many qualifying years (in terms of National Insurance contributions and credits) remain for you to receive your maximum amount.

But even if you have missed a few years, perhaps due to things like travelling abroad, you might qualify for National Insurance credits, so it’s important to look. You can also make voluntary National Insurance contributions, to fill in any gaps, if you missed a few years but are not eligible for credits.

So, how do you see your retirement? Will you want to jet off around the world or enjoy a quieter life? It’s important to consider the life you want and how much you’ll need to save to pay for it. Making sure you’re on track for covering the daily essentials and any extras is key. Use the online pension calculator to start planning.

Staying on top of your pension savings is the best way to guarantee retirement security. So make sure you keep checking in, and that your pension is still what you need.

“I’ll go online and use the calculator to put in some figures and see how I’m doing,” says Ollie. “It helps me keep tabs on everything.”

Once you’re able to see how much your current savings will give you – or how much you need to save to have the lifestyle you want – you can work towards making any changes you need.

Busting the pension myths

There are plenty of myths around retirement planning that need to be busted. Here are some of the most popular misconceptions…

1. With my State Pension and workplace pensions organised, my retirement will take care of itself

The State Pension provides the foundation for retirement, and automatic enrolment into workplace pension schemes has also helped by making saving for your future even easier. A combination of both is a great start, but be sure to check your figures so you can be sure you’ll have enough to continue doing the things you enjoy when you retire. You can check your State Pension forecast at gov.uk/check-state-pension.

2. Getting a pension is complicated

There’s plenty of help to get you started. Chances are you will have been automatically enrolled into a workplace pension, which means you will benefit from your employer making contributions – and usually get tax relief. Visit retirement planning website yourpension.gov.uk to find out how to get your State Pension forecast and access tools like the pension calculator, which can help you find out where you stand and work out what you need to do for the future.

3. I can’t afford to save much so it’s not worth getting financial guidance
There are some things you can do right now that won’t cost you a penny. You’ll find a wealth of free guidance at yourpension.gov.uk and moneyhelper.org.uk. These websites will help you break down your planning into steps and take them one at a time.

4. I’m too young to worry about retirement
It’s never too early to start saving. While investments can go up or down, the earlier you start, the more money you are likely to have, as your savings will have more time to grow. People are living longer and will need their money to last. Even if you haven’t got much to set aside right now, make a plan to see what’s already in your pension pot. Then when you do have a bit extra to spare, you’ll have a clearer idea of what you want to do with it. Most pension schemes allow you to start, stop, top up and amend your contributions as you go along.

5. I’ve sorted my pension already
Well done, that means you’ve at least made a start – but complacency is your enemy. It’s important to keep checking regularly on your pension savings to make sure that they are still suitable for the retirement you’d like to have. Again, use the online pension calculator to keep an eye on how your pension pot is doing.


Confused about retirement planning? For your best next steps, go to yourpension.gov.uk

 

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