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Is it too early to start thinking about my retirement plans?

Thinking about saving for your retirement can be a daunting process, especially if you are still paying off a student loan or trying to get onto the property ladder. However, it is never too early to start thinking about your pension.

We get it, pensions aren’t the most exciting topic.

It’s not surprising that that one in three 35-44-year olds haven’t given any thoughts on how they will manage financially in retirement, according to the FCA’s Financial Lives survey. Yet, recent research from VitalityInvest suggests that although the majority of Brits are aiming to spend their retirement travelling and relaxing with family and friends, 44% of UK adults don’t think they’ll be able to afford to do so.

When should I start saving for my pension?

 Starting to think about your pension, and preferably contribute to your pot as early as you can is ideal. This is because the earlier you start planning, the more time your money has to grow.

However, we understand that this is often easier said than done. Which explains why one third of UK adults aren’t currently saving for their retirement. If this applies to you, it may be a good idea to do something about this sooner rather than later. If you have no idea where to begin, you might want to chat to a financial adviser and get that retirement plan started.

How can I save for my retirement?

Many people have financial goals that they feel are more urgent than retirement, such as repaying a student loan, paying off the mortgage or building up an emergency fund. However, this doesn’t mean that you shouldn’t also be thinking about your future.

It may be a good idea to have a look over your financial goals and prioritise them. Although not an exciting topic, a pension is an important one, and if you don’t think about it, nobody else is going to for you.

If you’re employed, it’s likely you will have been auto enrolled into your workplace pension. If you’re unsure about this, it’s worth checking out – this is because your employer will most likely pay contributions towards your pension too.

For self-employed people, a pension can be a great way to set aside money. The tax benefits of a pension should make it a no brainer because with other investments, such as savings or property, you may have to pay inheritance tax, income tax or capital gains tax on them.

You also may benefit from making some extra contributions to your pension when you can. For example, if you receive a bonus at work or if you manage to make cutbacks on other outgoings. Remember as your situation changes, so may your financial needs, so it’s important to review your pension regularly to ensure it’s still fit for purpose.

Should I take lump sums out of my pension?

 Usually from the age of 55 you are able to take a tax-free lump sum of 25% of your pension. However, just because you can, doesn’t mean you should. If you are really certain that you need to take a lump sum from your pension, it is often a good idea to talk this through with your financial adviser to ensure it’s not going to impact your retirement plans.

 Need some more advice on your retirement goals? Get in touch with one of the team today.

* Investments can go down as well as up so you may not get back the original capital invested. Pensions should be seen as long term investments. Tax and legislative treatment of pensions could change in the future.

 

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