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Retirement is one of the most important milestones in your life, and so it is vital that you prepare for it in the way that you would any big life event.
By preparing in advance, you can be sure that your transition into retirement will be as smooth and secure as possible, with the right funds behind you.
- Save from the Start
Firstly, it is important that you begin to save from your very first wage slip. Even if you are self-employed, you should set up an independent pension fund in which you can save money towards your retirement. This will not only ensure that you have enough money come retirement, but that you can take advantage of compound interest rates. For example:
- Someone that saves £100 a week for 40 years will have £120,000 in their account.
- Someone that saves £200 a week for 20 years will only have £75,000.
If you need more advice on the advantages of saving over time, Portafina can connect you with an expert who can talk you through your options.
- Save Alternative Pensions
Many people do not realize the extent of the state pension, and believe that they will be able to survive on this alone. However, state pensions are £115 a week, or over £6,025 a year, which many people would struggle to live on, especially if you are looking for luxuries.
Rather than live off this small sum, you should ensure that you set up alternative pension schemes to contribute to throughout your life. If you want to find advice in setting these up, you should check Portafina’s Facebook, Twitter, YouTube, and LinkedIn accounts for the latest information.
- Do Not Solely Rely on Equity
People that do not prepare for retirement will often find themselves relying on their home’s equity to see them through. However, there are many possible negative effects of releasing equity in retirement, such as adverse effects after your death and getting less than the market price for your home.
- Buy Annuities on the Open Market
Instead of buying annuities from the closest pension scheme, you should consider looking at annuities sold on the open market. These will often be better deals, and once you buy an annuity, you can not often turn back – so you should make sure that it is the right deal for you before you buy.
- Auto-Enrol on Your Workplace Pension Scheme
It is now compulsory for employers to auto-enroll you onto a workplace pension scheme once you have been working in a position for long enough. Employers must pay 0.8% of their revenue into pension schemes, and so utilizing this will increase the amount that you are putting aside. Not only this, but you only pay 0.2% tax on your contribution, and your employer pays 1% at the moment.
- Track Your Pension’s Growth
If you open your pension and leave it to grow over time, chances are there may be changes to regulations or your circumstances which could affect your pension’s growth. To minimize the effect of this, you should check your pension’s increase often to ensure that it is growing at the rate necessary to secure your future. Disclaimer: Please be aware that the above information is not financial advice. For any financial decisions you need to make, please make sure you talk to a qualified financial advisor.
Planning retirement is quite a crutial thing for working people. But before that one should take a good job.
Even after doing engineering many people are not able to get a job due to lack of experience. I was one of them. But then I heard about internship. It is a practical training for the job which acts as a stair between the qualification and job. I did my internship and soon got a job.
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Thanks for your comment and your advice about seeking an internship if a regular job is not available.
Interesting content. Most of today’s working people don’t think about it. The first tip is probably hard for me, your post help me to understand real things. Saving is a big word for me.
My wife and I have been thinking about how we can plan for our retirement so that we can be prepared and have a lot more fun once we are done working. Talking to a professional about how to financially prepare and what we can do to help could be really useful. I liked what you said about how we should be sure to have a pension scheme without the workplace so that we can increase the amount of money we are putting aside.
Hi Author,
Some genuinely wonderful information, Glad I discovered this. I must say that you’ve done a superb job with this.
It really helped when you mentioned that preparation is vital in achieving a proper retirement period. I’m still in my early 30s but I want to retire early and spend time with my kids if possible. Maybe I should seek help from a private consulting company to see how I can achieve my goal.
I am planning on retiring in 3 more years. at 59 1/2 with around $600,000 in my 401K – I am building what I call my Noe’s ark – I am going to buy me a new riding lawn mower – snow blower – a lot of oil and different oil weights – I have my new car and new truck and 2 work vehicle’s that will last me till I die.
Interesting way to look at retirement and getting there in time! Thanks for the post
You should always seek the best pension advice before getting yourself into the financial balancing world. It is always better to be prepared.