Saving money is rarely as easy as just deciding to do so. According to the Institute and Faculty of Actuaries, UK workers hoping for a moderate retirement must set aside one quarter of their income for their entire working life in order to have enough money when the time comes. If that sounds daunting, it may be time to think about how you will secure your income when you finally leave the working world behind.
The State Pension Isn’t Enough
Counting on the State Pension to see you through? That may not be the wisest decision. Most UK workers will be able to access this pension when they reach the appropriate age, but not all will receive the maximum amount of income. In order to be eligible for that, you must have worked at least 35 qualifying years (years in which you made more than £166 per week from a single employer or made National Insurance contributions from self-employment earnings) within the country. If you do this, you will receive weekly payments of £129.20 as of this year. This is not a very large amount, and many people will receive even less than that. The State Pension will ensure that you are not destitute in your old age, but it should not be counted on as a means of ensuring a comfortable retirement.
The Workplace Pension Shortfall
So you probably won’t be able to fund your retirement with government money – what about your workplace pension? While 76% of workers are also currently contributing to a workplace pension plan, many stick strictly to the minimum contribution guidelines and will therefore likely end up with small final pay-outs. In addition, many people are engaged in precarious work and do not even have the option of funding their retirement this way. You may be able to secure a chunk of extra income through this channel, but it isn’t a universal solution and may not be the best method of saving for your future.
Securing Your Own Financial Future
One thing that anyone can do to improve the level of income they can count on in their later years is to start a private pension for themselves as soon as possible. These savings vehicles allow you to make the most of whatever money you manage to put away by investing it into a portfolio for long-term growth. You can choose which type of portfolio best suits your situation and risk profile. If you are young and don’t mind waiting out market fluctuations, for example, you might go with a high-risk and high-growth portfolio to try to get as much money as possible. If you are older and are worried about potentially losing access to that money when you need it, however, you can opt for a low-risk one instead. Even if you are very conservative in your decisions, investing your money will almost always leave you with more to spend in the end. It’s an excellent way to make sure that you’ll have access to the funds you need to make your retirement a happy one.
Saving even just a little bit for your future is always better than saving nothing at all. Now is the time to investigate the options you have to make your money grow. Making the right decisions now will give you the freedom to make your older age into the incredible experience you’ve always wanted.