No matter your age, saving for the future can be hugely beneficial. Your retirement is a period of your life to look forward to – finally finishing your time in employment and taking time out for yourself and your family. Whilst workplace and private pensions are an option, saving for your retirement mean that you can have financial security when you decide it’s time to stop working.
There are a few things that you can do to ensure your pension savings pot looks as healthy as possible, like paying off existing payday loans or setting yourself a realistic target for motivation. Read on and we’ll go over some of the key points when saving for retirement below.
Why invest in a pension?
It is important that we all invest in a pension from the moment we begin working. A pension is a way of saving money for later in life, and means that you can retire comfortably, and have enough money to live on when you no longer earn an income.
The National Insurance contribution that you’ve been making throughout your employment means you are entitled to funds paid by the government when you retire – however, this may not be enough to live on without compromising your way of life, so saving money yourself is advantageous.
Types of pensions
Workplace pensions
This type of pension is arranged by your employer if you earn more than £10,000 a year. Both you and your employer contribute to this type of pension and the amount that you’re paid when you retire depends on the funds you’ve paid in and how long you’ve been making the payments.
Personal pension
If you’re self-employed and the first option doesn’t apply to you, you can choose your own provider to go to and pay monthly funds or lump sums. The benefit that comes with this is that you will likely be offered a range of investment funds, the downfall is that you won’t be able to take advantage of employer contributions.
Start saving early
When it comes to saving for retirement, it goes without saying that the sooner you start saving, the better. Opening a savings account when you become employed allows you to put money aside each month – you could even open a savings account specifically for your pension so that you know how much you’ve saved and if you’re reaching your target.
It is a good way of keeping your pension money to one side and means the funds you save can help top up your pension in retirement.
Pay off your debt
If you’ve racked up debt over the years, making sure that you clear it, or prioritize making repayments to lower the amount is beneficial when it comes to saving.
The sooner you clear any outstanding debt, the sooner you can start saving more of your hard-earned cash for your retirement fund. Paying off debt generally puts you in a better position financially and frees up more of your income.
Make your pension a priority
There are many reasons that you might decide to save, whether you’re hoping to buy a house, a car or you’re putting money to one side for a wedding.
It is important that you prioritize saving for your future – it may seem like a long way off now, but saving a little every month adds up, and your future self with thank you for it when you’re comfortably retired.
Set a pension goal
Setting a savings goal is great for motivation. Take a look at your budget and decide how much money you could afford to save each month – a little is always better than nothing.
Make sure the goal is achievable so you’re more likely to stick to it. You’ll soon see your funds increasing and your future will look brighter.
