Most people in their 20s and 30s will admit that retirement seems a distant thing and not something they need to concern themselves with at this time. And while this is true in terms of the years, it isn’t true in terms of the money – the earlier you start saving for retirement, the easier it is. So, when should you start saving and what options are there to make the most of your money?
Most people are in their 20s when they start earning money, either after college, university or having done a few starter jobs that weren’t hugely well paid. This is also the ideal time to start saving for your retirement, as boring as this might seem. For example, if you want until you are in your 30s to save, you need to put away £149 a month to have a £10,000 pension by the age of 68 and this figure jumps to £290 a month if you want for your 40s.
If you have a company scheme at work, then you may well already be in it – many companies have started to auto-enrol staff as part of the government scheme. You may want to consider increasing how much you put into this each month or even look at a personal pension separately to this that you can put money into yourself, apart from any work based scheme.
For most people, the 30s is the time when the big bills at their highest – mortgages, car loans and also if you have kids. But it is also a crucial time to prepare for retirement. It can be tempting to shut down those pension schemes or ISAs that you started in your 20s to free up money for other, pressing matters but it is important to try and keep them doing.
Look for schemes that have high growth and put away as much as you can. Make sure you are in those company schemes as your employer will be contributing too.
Now is the time to get serious about your retirement preparations if you haven’t already. You might want to use the DWP phone number for pensions to check what your current retirement age is and what your state pension is looking life – okay this might change, but it gives you some ideas.
This is a good time to focus on paying off your mortgage and clearing other debts so that you can focus on your pension pot. Look to keep increasing contributions as you clear debts – you didn’t have the money in the first place so you won’t miss it.
It isn’t uncommon for people who have prepared well to retire as early as 55, although they aren’t entitled to their state pension at this age. This is all dependant on how much you have in your retirement fund and what you want to do with your life. If you are continuing to work until state retirement age or beyond, then this can be a great time to really enhance your pension as mortgages are often paid off and other debt cleared.
When you reach retirement, whatever the age is when you get there, you can use that DWP phone number for pensions to find out what your state pension is and how you receive it. At the moment, the state pension is worth £159.55 a week although this does increase a little each year. You can also look at your private pensions and see what options are available with regards to lump sums and what you want to do with the money. Chatting with a financial advisor can be a good idea at this stage.
