02 Mar 2017
Rising rents and house prices, combined with years of low wage growth, have made it hard for people to save.
With the cost of living rising, some people appear to be putting off saving into a pension, or not saving at all. This is leaving a third of Britons in their late 30s facing a mid-life savings crisis.
By delaying saving into a pension, a substantial number of Britons could end up with an inadequate income in retirement.
Younger generations who delay saving may have to retire later. Britons reaching the age of 40 with no pension savings could be forced to work much longer to achieve a secure retirement. Even those nearing their 30s without a pension should not assume they can make up lost ground at a later age, no matter how far of retirement may seem.
Delaying saving for a few years can wipe tens of thousands of pounds off the future value of your pot. The earlier you start investing into a pension, the more your savings will benefit from the compound benefit of growth on growth.
It is important for savers to maximise their employer contributions and take advantage of pension tax relief. The good news is that your employer and the Government can help to boost your savings.
If you save into a workplace scheme, it is likely that your employer will pay into your pot - with many matching your contribution. It makes sense to take maximum advantage of this. Any money you save is also boosted further by a government top-up in the form of tax relief.
Under auto enrolment, many employers are obliged to pay into a workplace pension for their employees. If you decide to opt out of the scheme, you will miss out on employer contributions and tax relief which is free money by any other name.
Regardless of whether or not you have started to save, these four tips can help get your pension on track:
A critical aspect of retirement planning is how you structure your financial affairs to make sure you have sufficient money if and when you stop working.
If you would like to review your current retirement plans, please contact us by clicking here.
Information based on our current understanding of taxation legislation and regulations, any levels and bases of, and reliefs from, taxation are subject to change.
The value of investments and income from them may go down. You may not get back the original amount invested.
Past performance is not a reliable indicator of future performance.