Is it ever to early to start thinking about pensions?

Whether you are just starting your career, just starting to think about retirement, already planning or enjoying retirement to the full, the key to successful retirement is all in the planning and it’s more important today than it has ever been. And, it's never too early to start planning.
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Pensions could be considered a bit of a minefield and true enough there are lots of options to understand and navigate.  One fact remains and that is saving early be it through a workplace pension (which your employer contributes too) or a private pension is a wise move and the sooner you start, the better.   For instance, a person aged 20 saving towards the same goal as a person starting to save in their 40s will save a fraction of the amount each month to achieve the same sized pot at retirement.

The state pension currently pays a maximum of £175.20 per week (depending of the amount of National Insurance you have paid during your working life). So, if maintaining your lifestyle will cost more than this, you’ll have to save for it.   

​To give you an idea, a recent survey by Which? Money found that a household enjoying a BASIC retirement lifestyle required an annual retirement income of £17,800, a COMFORTABLE lifestyle required £27,000 and a LUXURY lifestyle required £42,000 per year.  That’s a total pension pot of between £215,450 and £695,000 (for a comfortable or luxury lifestyle depending on how you access the funds).

It is possible to find out how much state pension you are entitled to as well as when you are entitled to claim it.  Simply visit the government website and enter a few personal details including your NI number you’ll be given a figure.  Check it out at https://www.gov.uk/check-state-pension
It’s also important to remember that as with any income, pension payments are taxable.  Your pot therefore must take this deduction into account, if you are likely to receive payments over the tax threshold.
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After all of the saving there are also decisions to make about how to access your pension funds – either as a lump sum or monthly payments.  There are of course pro’s and con’s for both and the decision will be dependent on how you intend to spend your time in retirement.  

The importance of impartial advice and expert help

We’re not experts in pensions or personal finance and we recommend seeking independent financial advice from an expert who can help your personal situation.  We have provided links to some useful and impartial sources of information about what to think about, how to navigate pensions available to you and who to contact for additional help;

Pension Wise: Pension Wise is a free, impartial government service offering pension guidance to help you make informed and confident decisions about your future - for more on the pension freedoms. 

Money Advice Service:  Another free and impartial government run money advice service which gives advice about a broader range of money related matters, not just pensions.

The Pension Advisory Service offers free pension advice and support to people.  They can help with any query from pension basics to pension options for the self employed.

Which? Money: Have written a ‘Planning for Retirement’ guide full of useful information.

Money Saving Expert, Martin Lewis and his team have written a nuts and bolts guide to pensions.
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Money Facts: An independent organisation specialising in the comparison of financial products.  Their retirement advice covers equity release and annuities.

Unbiased: If you’d like to get expert help from a financial advisor, check the website which can help you find an IFA near you.

Money Saving Expert have also written a guide explaining what to expect from IFA’s and how to find the right IFA for you. https://www.moneysavingexpert.com/savings/best-financial-advisers/

​As we live longer, healthier lives it makes sense to make the most of the opportunities that freedom from employment brings.  Living the life you aspire to in retirement is achievable with some forward planning and good advice, which is readily available. Start planning today.