We all need to make provisions for when we are no longer working, as of course we will still need money to survive. But for many, it is hard to get going in putting away money. It does not have to be an impossible dream however, whatever your situation. We look at how to start a pension pot.
This is the least spoken component of retirement planning, yet it is the most crucial. Consider the following question: What are your goals for the future?
Will you go on a trip? Do you want to keep working? How many relatives do you have? Like wine? Do you want to learn something new? All of the aforementioned?
Knowing what you want out of life will help you understand why you’re saving and give you a target to aim toward. This will not only help you quantify the enormity of the problem, but will also mean you stay motivated when things go tough.
It will be easier to save for retirement if you start early. It not only establishes a lifelong money habit, but it also allows you to reap the benefits of ‘compounding,’ or the effect of earning interest on interest, for a longer period of time.
When it comes to saving for retirement, it doesn’t matter how much or how little money you have on hand. The important thing is to get into the habit of putting money aside on a regular basis. Increase that amount each time you receive a raise (before you get the chance to spend it). Small amounts will surprise you how much you miss them. And how rapidly you accumulate funds. This, in turn, motivates you to accomplish even more.
For sure, we take more career pauses as women than men. This has an impact on our earning potential. If you have the resources, you can contribute to a pension even if you are not working. You can contribute up to £3,600 every year.
Surprisingly, according to insurance firm Aegon, 42% of women have never evaluated or taken action on their retirement plans. More than a fifth say they don’t grasp what they’re being told. Which, to be honest, isn’t unexpected. Pension providers aren’t known for their candour in their discussions. The trouble is that if you don’t analyse what you already have, things can easily spiral out of control.
If you left funds, they might miss out on contemporary developments such as decreased costs and increased investing monitoring. And part of the money that could have gone toward the owner’s retirement has been diverted to fees that will now be used to fund someone else’s.
Checking the performance of funds, evaluating costs, and maximising the potential for your investments are all simple tasks that can considerably boost your money’s growth prospects.
If you work, there’s a good chance you’re enrolled in or going to enrol in a workplace pension plan. Take advantage of the opportunity. Opt out is not an option.
By 2021, your employer will contribute 3% of your income to a pension, you will contribute 4%, and the government will add another 1%, for a total of 8%. In other words, for every £1 you save, you will receive £2 in return. Your money will be doubled. With no additional work required.
That is an offer that appears to be too good to be true. Keep take mind that your Auto Enrolment contributions are limited.