Saving for the future
The thought of saving for retirement, in whatever form that takes, causes in many people a real sense of doom and gloom. Firstly because there are always other more immediate pressures on your money and secondly because people often think of pensions as complicated and expensive. However, it doesn't have to be and as we were quoted on BBC Breakfast this morning, we estimate that getting a decent pension may not be as far away as you think.
We estimate that if you are 25 years old, you would need to save about £66 per month and receive an annual fund increase of 5% per year, this will give you over £100k if you retired at 65. (based upon a pension that is for you only and doesn't increase). Building up a pension pot of £100k will give you roughly £5,800 per year, in today's money.
If you were 35 years old, to get a pension pot of £100k would cost you roughly £121 per month or if you start saving at 45 years old, £244 per month.
These estimates do not take into consideration any contributions that your employer will pay into a pension scheme. So with employers starting to automatically enrol employees into workplace pensions (unless you choose to opt out) you can also use this additional contribution to help you reach this figure or add to it making your retirement savings even better.
As these figures show, the sooner a person starts saving into a pension the more likely it is that they will be in a position to have a more comfortable retirement and the easier it is. Of course there are always a lot of assumptions and the usual caveat of “money can go down as well as up” still applies. However, these estimates are a good starting point and are aimed at showing people that a decent retirement is possible.
As the role out of automatic enrolment continues across the UK, all the UK's working population will at some point be placed into a pension scheme and benefit from an employer's contribution and tax relief from the Government.
For more detailed guidance on how you can get started, give us a ring!
To download our booklet on saving into pension please click here
If you want to talk or ask a question to one of our advisors about planning for retirement you can call our helpline on 0845 601 2923, talk to an advisor live on our web chat facility or send as an enquiry on our online form.