For many young and middle-aged adults, retirement is often a distant thought, with other daily concerns eclipsing worries about the distant future.
If you want to retire comfortably, it is never too early to start saving. After all, as the Guardian reported, detailing statistics from Aviva, retirees need, to live day-to-day, close to £13,000 per year. And that's just to get by. If you have your heart set on a retirement filled with holidays and leisure activities, you'll need considerably more than that.
Thankfully there are a number of simple ways to start saving. Here are five useful tips:
1. Personal and workplace pensions
According to Money Supermarket, there are several forms of pension that you should be aware of: state pensions, workplace pensions, and personal pensions. As reported by the Guardian, while state pensions are certainly helpful, they are by no means enough to live off of, as they average just over £6,500 per year. If you want to live comfortably in retirement, it is important that you invest in both a workplace pension program and a personal pension scheme, if funds allows. Money Supermarket explained that workplace pensions involve joint contributions - both you and your employer will contribute to the fund, with your employer adding a percentage of your annual salary. To boost your pension fund further, it can help to open a personal pension, which is taken out privately.
2. Save early
When it comes to saving for retirement - or pretty much anything else - the maxim to abide by is this: the earlier the better. Money Supermarket explained that the best time for individuals to start saving is in their 20s, although for many this is understandably unrealistic. If people start saving in their early 30s, however, setting aside close to £150 a month, it is possible to accrue a small pension worth around £10,000 a year by retirement age of 68. Those who save earlier will clearly reap the rewards of a larger pension.
"The maxim to abide by is this: the earlier the better."
3. Look into tax breaks
According to The Telegraph, it helps to find ways to ensure that you don't pay more tax than you need to in retirement. Opening an Isa is an effective way to a tax-free source of income. When this is added to money derived from personal and workplace pensions, you'll likely find that you have more money to play with in retirement.
4. Increase your input regularly
Finding ways to increase the amount you add to your personal pension is an effective way to boost your savings in the long-term, The Daily Express explained. The newspaper interviewed a financial planner, Danny Cox, who explained that even small increases of less than 10 percent a year can help make a difference.
5. Keep track of all your pensions
As detailed by Cox, in his interview with The Daily Express, few people stay in the same job throughout their working life. In fact, most people average over 10 jobs prior to retirement. Consequently, it is surprisingly common for people to join pension programs and then forget about them as they transition to new roles at different companies, thus leaving money they are entitled to unclaimed.
"Some estimate the total of unclaimed pensions is in the scale of billions," Cox told the publication.
Don't let this be you. Find an easy way to keep track of all your pensions, with the details you need handy, whether that's in a diary or in a spreadsheet on your computer. After all, complacency in this area could lose you the hard-earned money you are entitled to.
At Gracewell Healthcare we offer an array of renowned retirement homes, with various levels of service, contingent on need. To learn more, contact us today.