Millions of Britons fail to plan adequately for retirement and end up having to survive on the £144 per week state pension offered by the government. With the average life expectancy constantly rising and medicine ever improving, you could well be looking at living well into your nineties.
So your retirement could potentially be thirty years. Some people don’t know how to save for retirement, whilst others simply do not think about it; planning ahead is something that takes conscious effort but will save you considerable stress when the time comes.
Some big companies offer their employees strong pension schemes whereby the employer pays into it as well as the employee, however this tends to be the larger and more reputable companies. For those who don’t work for such companies; a personal pension is also an option. While these can benefit you immensely during your retirement they are more rewarding the longer you pay into them i.e. they are best started in your late teens or early twenties.
The alternative is to use your savings during your retirement and ideally by the time you reach your forties you'll already have savings in some form, whether in ISAs, business or investments.
If by the age of forty you are lacking on the savings front though, don’t think you’re destined to live your latter years on the breadline. It will just require more effort. Now is the time to make sure you plan for your retirement, and it's imperative that you are pro-active. By the age of forty your earnings are likely to be nearing their highest point, and you should have your debts well in order. You should now be able to put some money towards your future and ensure a comfortable retirement.
You should make the most of pay rises and any bonuses to boost your retirement fund, rather than buying expensive luxuries. You need to take your retirement planning seriously, which means having a target age for retirement and a clear picture of what your lifestyle will look like when you are retired. You might not have a clear vision of what you want when you retire, but you should be thinking about it in broad terms and making sure you are financially on track.
At the very least you should have an ISA. These are high interest savings accounts that allow you to save over £5700 per year tax free. By contributing to this over time you’ll soon see your savings stack up and over the course of 25+ years (until you retire) you’ll invariably end up with more income during your retirement than if you start a pension now.
Remember your retirement years could number 30 or more so you need to provide for it adequately now. After all, beans on toast for a few days is one thing but beans on toast for 30+ years is another thing entirely.
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