What are your dreams for after you’ve retired? Do you want to travel the world? Acquire new skills or immerse yourself in hobbies? Maybe you want to visit friends abroad. Whatever you’ve set your heart on, a carefully structured pension plan will help you get there.
This does not constitute advice and advice should be sought in all instances before acting on it.
What is a pension plan?
A pension plan is simply a pot of cash that you, and your employer if you have one, can pay into as a way of saving for your retirement.
You get tax relief on the money you save and then when it comes time to retire, you can draw from your pension pot – or if you’re interested in an annuity, exchange money with an insurance company for a regular income until you die.
The biggest benefit of a pension – besides saving money for retirement – is the tax relief, which varies depending on whether you’re a basic-rate or higher-rate taxpayer.
How much should I contribute?
Thanks to auto-enrolment workplace pensions, you’ll meet the minimum contribution levels. But you should always consider contributing more if it’s feasible.
If you have a lot of debt, it might be worth paying that down before ramping up your pension contributions. But as soon as you can afford it, you should start putting as much into your pension as possible and start contributions as early as you can. The longer you’re saving and allowing your wealth to grow, the better your retirement will be.
A simple calculation to figure out how much you’ll need to save:
- Take the age you start your pension and cut it in half.
- Put this percentage of your pre-tax salary into your pension pot every year until retirement.
The end result might seem like a daunting figure, but don’t forget that it will include your employer’s contribution as well so you only need to bridge the gap.
Work with the pros
Dental & Medical Financial Services considers changes to public sector retirement and pensions whilst developing and reviewing your retirement plan. Whether you’re currently contributing to a pension pot or nearing retirement, the professional financial advice we offer to doctors is designed to help you build a more secure future. Get in touch to get started today.
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Dental & Medical Financial Services have been helping doctors and dentists to build and protect their wealth, whilst saving tax for over 25 years.