The age you can access a state pension is rising gradually in the UK, it is currently 66 years old for people coming up to retirement now, but the younger generation today will be eligible for it when they are 68 years old. However, if you are careful with your financial decisions and investments, you could be able to retire considerably earlier than this.
Saving for your retirement is by no means easy and it involves always thinking ahead, but it is certainly feasible when you put your mind to it and keep yourself well informed. To help you out, here are some key pieces of advice on how to save for your retirement years.
Start saving early for your retirement
Unless you win the lottery or are wonderfully fortunate, you will need to start preparing for retirement financially from pretty early on. Saving up your money and putting it in a retirement fund from an early stage in your career will mean your money will be invested for longer and therefore have more time to grow.
The early bird catches the worm when it comes to building a good retirement fund over time.
Get yourself a reliable pension scheme
There are two main types of pension schemes. Employees usually are offered occupational pensions and self-employed take out personal pensions. The difference between the two? An occupational ‘workplace’ pension is organised by your employer alone, whereas a personal (‘private’) pension must be set up by you without any input from your employer.
Signs of good reliable pension schemes include
- The employer doubles the pension contributions of employees
- Low ‘management charges’ and no hidden charges
- The option of pension payout in the case of ill health
- Provide the prospect of early retirement
- Death in service benefits
- Benefits for partners (such as a widow’s pension)
Avoid needless overspending, every little adds up
If your income isn’t so high, but you spend the years you ought to be saving for your retirement on expensive fast cars and glamorous holidays, you may be shocked when you realise the amount of have left for retirement.
The key thing to do is to prioritise your spending wisely when saving for retirement. Do you have a young family? Spending money on feeding and clothing them, and covering things like nursery fees or school uniforms and equipment should be your priorities.
Build a solid investment portfolio
You can build up a sound investment portfolio by putting your money into stocks, shares, and other investment funds, just be sure to vet them and check how secure your money will be.
Become a landlord and invest in bricks and mortar
Becoming a landlord and renting out properties can be a great savvy approach to long-term investments when saving for retirement that will provide you with a nice bit of extra income every month. What’s more, you can pass the property onto your children (bear in mind the standard inheritance tax is 40% if your house is worth more than £325,000).
Although it can sometimes seem like hard work and you might occasionally be unfortunate in getting the odd tricky tenant, becoming a landlord of a buy-to-let can be a great way of saving lots of money towards your retirement years. Buy a property in a student area and you will find it will always be in demand by tenants!
But you always need to ensure you cover your back when it comes to property investments, any range of maintenance, repairs, damage, theft or tenancy issues can occur. Take a look at CIA Landlord Insurance to get your hands on flexible and comprehensive landlord insurance policies that will provide you with coverage for all eventualities that could impact your investment property, which is there to raise money for your retirement.
Have an emergency savings fund as a buffer
When saving money for retirement, it is always vital to keep aside money for a rainy day or emergencies, we can never know what the future may hold.
With an emergency saving fund, it is less likely that you will experience financial difficulties or be in a situation where you need to borrow using high-interest loans.
Take out a lifetime ISA (individual savings account)
Lifetime ISAs can turn into an integral part of your long-term retirement saving plans. Taking out a lifetime ISA means you could well benefit from better returns over a longer time period. Setting up a lifetime ISA, the government will give you a 25% bonus of what you pay in every tax year (up to a limit).