There’s more to managing money than simply paying the bills and putting food on the table. Of course those are key ingredients, but your financial stew also includes matters such as investing, debt management, controlling credit, and other important money concerns. Among this group of finance concerns, retirement looms large on your future financial landscape. Though you may have many years left in the work force, it’s never too early to plan and execute an effective strategy for achieving your retirement goals.
Saving for retirement is only one piece of your financial puzzle, so it competes with other money concerns. While you’re focused on day to day money handling responsibilities, it’s easy to lose sight of long-term financial goals, such as saving for your golden years. Even though it may be one of your top financial priorities, putting by cash for later life has a way of taking a back seat to other financial matters, which can result in lagging pension pots. Fortunately for UK workers with insufficient retirement savings, it’s never too late to do a better job addressing your pension needs.
When it comes to your pension pot, identifying a clear monetary goal can help you stay focused on building retirement reserves. The first question to answer, on your road to trouble-free senior finance: How much is enough to fund a comfortable retirement?
How Much Money Should I Save?
Each case is unique – Britons financial status falls across a wide spectrum of wealth. If you have considerable reserves at your disposal, minimum projections don’t apply, but for average earners, these common retirement recommendations serve as a reasonable starting point for pension planning.
One recent analysis, conducted by a former government pensions minister identified £260,000 as the minimum savings threshold needed for Britons expecting a basic income during retirement. The assessment is based on the assumption each person would need to earn a basic income of £9,000 to top up their state pensions at age 65.
Final salary pensions are phasing out, so workers now rely on whatever is saved into their company plans. As Britons live longer and interest rates continue languishing at paltry levels, a pension pot of a particular size provides less income in today’s terms, than it did years ago. In 2002, for example, a pension pot of £150,000 would have provided a private pension income of £9,000 a year during retirement. To earn the same basic income today requires a pension pot valued at least £260,000.
Personal pension requirements rise dramatically for individuals unable to climb on the property ladder. It is thought today’s young workers, if unable to achieve house ownership, may each have to put by nearly £450,000 during their lifetimes, in order to maintain a basic income after leaving the work force.
Credit and Banking Alternatives
Credit and banking relationships have a significant impact on your financial health, so making informed decisions today protects your pension position in the future. It’s hard enough building pension reserves, but the cards are really stacked against you when past credit decisions interfere with your savings plan.
Borrowing wisely and committing to credit card discretion are two ways to maintain a manageable debt load and generate surplus savings for your pension. When you do need fast cash, online lending provides a streamlined alternative to traditional tracks. As long as you’re employed, several loan providers offer short-term funding, without spending restrictions.
Benefits of Getting an Early Start
Age is an important factor to consider when preparing your pension pot. As retirement grows nearer, your attention naturally fixates on gathering resources and accommodating your departure from the work force. You may be able to catch up later, if your early pension building efforts don’t measure up, but getting an early start on retirement planning is a better approach.
One report looked at the government’s auto enrolment scheme, projecting some Millennial Generation savers may only make it halfway to funding their basic pension goals, upon reaching pension age. The dismal outlook underscores the importance of getting an early start on personal pension planning.
Each case is unique, but one analysis suggests a private pension pot of at least £260,000 is required to maintain a basic income during retirement. The figure rises rapidly, when considering the needs of Britons that don’t own residential property. Wherever you currently stand, building an adequate pension pot is a financial priority you can’t put off.