You are just hitting your stride in your career; you are thinking about buying a house, maybe having children – life is definitely exciting. However, do you have a plan for retirement?
Thinking the unthinkable?
You may think asking about retirement planning is crazy. With mortgage payments or rent; childcare payments; all those regular bills – the question of survival is more pressing than the issue of a long away future. However, when you do reach 50, and you learn you have 17 or 18 more years of full-time work to go, you may wish you had done some retirement planning a go earlier.
An easy beginning to retirement planning
To avoid the sinking feeling of knowing you will need to work into your seventies to afford to retire, you need to make minor attempts at planning as early as possible. You need to consider the benefits of automated savings. Automating savings might be just setting up a direct debit of a small amount that you wouldn’t miss each month. A regular savings of just £50 a month would be £600 by the end of the year. If you are 30, this will be £12000 by the time you are 50.
As you get older, you might find you have more disposable income and can afford £100 a month. This would be £1200 a year. Once it is in your savings, our inner parent will make it difficult for us to plunder this money.
Making more savvy decisions
There will be times when you receive windfalls of cash that you were not expecting. This might come as a tax refund, an inheritance, a bonus from work, or some other lump sum. You will be tempted to do something luxurious and out of the ordinary, as it was unexpected; therefore, time for some fun. However, it might be better to transfer this money straight to savings to ensure a better future post-retirement.
Equally, you could seek out interest-friendly accounts or some low-risk investments, where your money can work a little harder. If you speak to a financial advisor, you will be able to seek out opportunities to maximise the funds you can save.
Keep informed about your pension
Finally, you should check out MPO (My Pension Online) which will give you an insight into the annual income you could expect in retirement. There are also flexibility options, which allow you to add extra to your pension – or maybe even purchasing an AVC (Additional Voluntary Contribution). Again, your financial advisor should be able to offer you insight and guidance.
It is never too early to seek a plan for your retirement. Trust us when we tell you that your 55-year-old self will be very thankful for any arrangements you put in place now. You may be tired of work by this point, but you will be a long way from being tired of having a life. Planning now means you can maximise this later period in your life and have some fun.
The content in this article was correct on 22nd August 2019. You should not rely on this article to make important financial decisions. Teachers Financial Planning offers advice on pensions for teachers and non-teachers. Please use the contact form below to arrange an informal chat with an advisor and see how we can help you.