It’s going to be a long time before you actually start receiving your pension. You’ll be more concerned about your current income right now, and of course this is perfectly normal. It’s always good to remember though, that there will come a day when your pension is your sole means of income, and therefore extremely vital. What many people forget is that you prepare for your pension decades before you need it, so you should give it some thought as soon as you start a stable job.
Save More – Have More
The simple fact is that the more you save, and the longer you save, the more money you’ll have when you retire. Those lucky people that manage to save a huge amount of money will even be able to retire earlier. Many of us dream of living out our retirement in luxury, being able to buy the things we want, do the things we want to do, and go wherever the moment takes us. The reality is that this is only something that can happen if you plan in advance, and understand the need for forward thinking.
Ways to Save
In the United Kingdom, there are several methods of receiving income as you get older. The primary one is the state pension. This is given to everyone who has worked and paid taxes for 30 years or more, but it cannot be relied on. For most people, it probably won’t cover the basic costs of living, so it should be thought of as a bonus to whatever you manage to save as a pension from your employers. Workplace pensions will be your main source of income, and the more you pay in, the more you’ll get out. Many employers will match whatever you put in, so funds can soon start to rack up.
The other way of having money upon retirement is of course to save money yourself. It’s essential that you remember that inflation means whatever you save will not be as valuable in the future, so investment is the best way to go. There is a huge range of opportunities, so this is something to research over time.
Your Retirement Savings is Yours
When it actually comes to retirement, the decisions don’t come to an end. With exception to the state pension, the rest of your funds are yours, and you may use them as you wish. This means that you could immediately take out a lump sum, to use n whatever you want. The rest of the money is usually used to buy an annuity, which is a product whereby your fund buys income for the rest of your life, but you must choose wisely, as rates can vary. The other option, which is more flexible, is pension drawdown, which means you choose as and when you take money out of your fund; though this mean more management and investment of your money. Contact www.pensionlite.co.uk for further details on pension drawdown.
Remember, you’ll have more money and a better retirement the earlier you start thinking about your pension, and now is as good a time as any.