Hi viewers. Today’s topic is
pensions. Some of you might think that it’s not relevant to you to start saving for a pension, or you can’t afford to do it yet, or
you’re already enroled in your workplace pension scheme and so having a
separate pension that you contribute to is not for you. Let me assure you, you
couldn’t be more wrong. Stats for pension savings have improved,
but they’re still pretty dire. Most of us won’t have saved enough by the time
we get to the age of 68 or whenever our State Pension is going to kick in.
Certainly we won’t have accumulated enough to fund our retirement by the time
we actually want to retire, which for most of us is probably around the age of
55 or 60. Pensions have had a bad rep in the past but regulation has made sure
that they are now products that you can trust your money in. They are invested in
funds so obviously you have to be happy with the amount of risk that you’re
taking in those investments, and if you have a pension but you don’t
know where it’s invested that is your first port of call – to find out if
you’re happy with the risk profile of the investments that your money is
invested in. A lot of us rely on our State Pensions when they come around, but
State Pensions might look very different by the time we come to claim them. For me,
I’m age 32 currently, I can’t get hold of my State Pension until I’m 68 years old
and that keeps getting changed and pushed back each time the Government review it.
So we can’t rely on that money coming into play when we think it might do so.
By the time it does come around I might have to wait til I’m 70 or older or the State
Pension might be a very different kind of animal by then. The National
Insurance Contributions that I’ve been paying towards my State Pension, I might
not see back in the same way that State Pensions are funded currently. It might be
that State Pensions are a lot smaller or they’re paid a lot later as I’ve already
said. So although we need to bear in mind that we
hopefully will get some sort of benefit in our retirement, we can’t pin all our bets
on the State Pension alone. And although it’s a very generous amount; at the
moment it’s about eight and a half thousand pounds a year if you have your
full National Insurance Contribution record, for a lot of people that will go a long way to help fund their retirement, but not everyone
will be entitled to the full amount and if you don’t know that’s something that
you should check. Workplace pension have come a long way to help people invest in
pensions who perhaps thought they didn’t need to before. If you’re working for an
employer and you meet the minimum requirements then you should be
paying and your employer should be paying into your workplace pension. If
you don’t know the details of these then you should be able to get that from your
employer, so please do ask them if you want to have a look and you want to know where your
money’s being invested and what the charges are on these policies. But
workplace pensions alone aren’t enough to fund your retirement. Even if you can
just afford to put twenty five, thirty or fifty pounds a month into a pension of
your own, or if you can afford to top-up your workplace pension, then it’s very
advisable to do so. You can benefit from tax relief, tax-free growth within the
fund and there are lots of other ways that you can fund your retirement,
but you need to think about it early doors otherwise it can get too late and then
it’s too late to do anything about it. Another thing people think will mean
they don’t need to think about their retirement is an inheritance. Now I’m
sure many of us somewhere in the back of our minds realise that we might be
getting an inheritance at some point, but we forget that our parents may well need
to use that inheritance money to fund their own care fees. If they get elderly
or infirm then they may need to very well go to a nursing home or a care home and
those fees can be astronomical – around £40,000 a year and that only
increases year on year as time goes on. So don’t pin all your bets on having an
inheritance that you think will fund your retirement. Because it might not
happen or it might be vastly reduced from what you think it will be. Not only that,
but do you know what your parent’s Will say or your grandparent’s Will says? For
all you know they may well have assigned their money to go to charity or to be
left to somebody else. So again, don’t pin all your bets on this
one income source. So if you think that you need to look
more at your pensions or you want an idea of how you can save better for your
retirement, or perhaps you want to explore some other savings vehicles for
retirement, get in touch and let me know how I can help you.