In the UK, millions of people end up worrying about their financial situation once they retire and have finished their employment. However, this doesn’t need to be the case, as there are a few simple steps you should take in your lifetime to ensure you are in a comfortable position once your employment comes to a close and retirement begins.
First of all, it is never too early or too late to start saving for your pension, but the earlier the better. Even though you may feel like retirement is quite a few years away, the earlier you get ahead with savings, the more money you will have when you retire, giving it time to grow.
If you assume that because you don’t have a large income that it is pointless to pay into your pension, then you are wrong. Every penny helps, no matter how small or large the amount is that you are wanting to put away.
To help break down how your income works we explain it to clients in this way:
You have your liquid wealth, which is the income that you have such as salaries and savings which are easily accessible. These are not your only form of wealth though. You have other types of assets which may include your home, businesses and pension, but these are not as easily accessible. Once your flow of income has stopped such as your salary, child benefits etc, then your other flow of income starts which is your pension.
To find out what you will be entitled to, you will need to get a state pension forecast, which will show how much you are likely to get. If you are entitled to the maximum amount, this is still a small amount of £8,767.20 a year. If you haven’t paid national insurance and if you haven’t paid it for a full 35 years, then you are unlikely to get the full amount and this can reduce the amount you will receive quite drastically.
If you have multiple pensions, bringing them all together into a self-invested personal pension (SIIP) is an option, but you want to be very careful about this, and research the companies you’re removing your pension from, as they can offer you benefits that may not be replicated elsewhere.
If the company you are working for offer you a company pension, do not opt-out!
As you can see, you need to invest in your future, don’t just rely on the state pension. We believe that receiving just under £9,000 a year is not enough for most people to have a comfortable lifestyle after employment and to really get financial freedom into retirement.
If you are wanting some financial advice on your pension and what is suitable for you, get in touch with us today.
Top Tip: Make sure you keep track of all your old and current pensions, validate that your contact details such as your address, and telephone numbers are up to date with the pension company.