Having a retirement plan is an integral part of a financial plan, and the closer you get to retirement age, the more important it becomes. However, a recent report revealed that one in six people over the age of 55 have no pension savings to speak of. For more on how to sail through life toward your retirement worry-free, read on.
This does not constitute advice and advice should be sought in all instances before acting on it.
The necessity of private pensions
There are a variety of reasons that someone might not have a retirement plan — they could be self-employed, employed by a company that never offered a pension savings plan, or perhaps their career was cut short for some reason. According to a survey by Unbiased and Opinium of 2,000 non-retired UK adults, at least 17% of people in the UK aged 55 and over admit to having no pension savings (other than the State Pension). For the average general population, this figure is only slightly better, with 21% saying they have no private pension.
Also according to the study, nearly half (45%) of all Brits hope for at least £20,000 a year in retirement income while 61% hope for at least £10,000. Even those who low-ball their expectations are off as the maximum state pension is just £9,110 a year.
It seems few are fully prepared for the realities of retirement, but the key to bridging the gap between what you expect and what will actually be provided by the state is a private pension.
Don’t put off saving
Early on in life, most people don’t prioritise saving for the future. Many focus on paying off debts or higher education costs and those who do save are putting that money toward a house deposit. Most people believe that they will have plenty of time to save later on in life, but this is simply not the case.
It’s never too early to start saving because the longer you save, the more you benefit from compounding — a useful tool that helps to grow your money exponentially over time. Also, if you keep waiting for the ‘perfect time’ to prioritise saving then you may never start! Make it a point to build a pension savings plan into your financial plan as soon as possible.
Close to a quarter (24%) of respondents under the age of 35 have no pension savings at all, despite being the first generation to benefit from workplace pension auto-enrolment. This figure drops to 1 in 5 for those ages 36 to 55. The numbers indicate that people do start to save as they get older, which is good news, but waiting until later on means missing out on years of saving and growth.
Know what your pension pot is worth
Worryingly, only one in five people don’t actually know how much they’ve saved toward their pension. Oddly enough, this statistic increases as people get older. It could be that because their contributions happen automatically, they don’t bother to track how much they’re saving. Or as they move from job to job they lose track of their workplace pensions and aren’t sure how much all their different pots would add up to.
Take the steps to corralling all your pensions together and calculating what your full pension fund looks like to remedy the situation as soon as possible.
Work with professionals
Consulting with a professional financial adviser that specialises in medical financial planning will help you ensure the lifestyle you lead after you retire is the one you want. To get a handle on your retirement plans, get in touch with us today.