Retirement feels a long way off for most of our lives – and then one day, we realize it’s just around the corner. It can be a startling and often stressful realization, with many worrying about how they’re going to cope financially.
According to research, six in 10 admit to being anxious about retiring. Financial concerns are among the most common stressors, with many worrying they won’t have enough in their pension pots to sustain them.
If you’re among them, be assured you’re in good company – and that there are ways to offset your fears and financially plan for retirement. We look at how you can do it in the article below.
Work out how much you want to save
Before you make plans, work out how much you need to set aside for the future. This varies from individual to individual and depends on the sort of lifestyle you want and what’s realistic for you.
According to HSBC UK, the percentage per annum you should save depends on when you plan for retirement. If you save toward your pension at 20, you should aim to put 10 percent of your annual income aside for this purpose; by the time you reach 30, this figure should be at least 15 percent.
Your pension pot will come from three primary sources: your State Pension, private or workplace pension schemes, and any additional income from property or investments. You can work out what you require based on the lifestyle you want using this retirement site.
Pay into a private pension scheme
If you’re lucky enough to live in a country with a State Pension, you’re off to a good start. That said, you’re unlikely to receive an overly generous stipend once you hit retirement age, so you may have to tighten your belt more than you’re used to.
The likelihood is that this amount will be topped up by a workplace pension, but if you’re still concerned about how much it will equate to or are self-employed and don’t have this safety net, a private pension scheme could be the answer. There are dozens of review sites available to help you decide between UK pension providers. These generally summarize costs, as well as break down their offerings. Many will also highlight other factors that are important to your decision-making.
So, what are the upsides of private pension schemes? First, they give you greater flexibility over where your money is invested, as well as how much you pay and when. This means you can tailor them to your needs and make sure your pension pot looks the way you want it to once you reach retirement age.
Save with the future in mind
As well as private pension schemes, there are several other ways to save. These range from investing to savings accounts. To choose which option is best for you, think about the level of risk you feel comfortable with.
For example, savings accounts are a low-risk option, but they also deliver lower returns, and their value can be lessened by inflation. Putting money into stocks and shares or equity funds is an alternative that could grow your money more dramatically, but it has a greater risk inherent in it.
When it comes to saving for your retirement, the most important thing is simply this: to plan in whatever way you’re comfortable with. The power is in your hands, so seize it now before it’s too late.