Let’s get you saving into that Pension in 2020!
At first glance, the idea of investing in a pension may seem more complicated than one may expect, especially with various factors and numbers to consider. Hearing a horror story or two about a friend or relative struggling with pension payments might add fuel to the doubt-fire. On the contrary, saving into a pension is much easier and convenient than one may think.
Typically, people rationalise not investing in a pension simply because they have state pension anyways, which will suffice for a lifetime. Unfortunately, state pension won’t suffice on its own.
With a maximum amount of £168.60 a week (or £8,767.20 annually), state pension can prove to be difficult to retire on alone, especially with inflation bumping up the costs of living.
A few options worth considering
Investing and saving into a pension adds a comfortable layer on top of the foundation provided by a state pension for a comfortable standard of living upon retirement. Millions of people in the UK fail to save a sufficient amount into a pension to achieve a comfortable standard of living when they retire, which is a crisis in itself. If you’re one of them, then there are three things you can do now:
- You can retire later until you save enough money into a pension to afford a sustainable and satisfactory lifestyle upon retirement;
- You can lower your living standards in regard to what you can afford and the lifestyle you can live during your retirement; or,
- You can make the right and sensible decision by saving more to boost up your pension to live comfortably at a time that suits you.
In essence, retirement is undertaken as a means to live comfortably for the rest of your life, which just goes to show that the first two options aren’t practical by all means. Saving more into a pension on top of your state pension can help tremendously with sustaining a comfortable lifestyle in retirement without having to be a financial burden to your family.
Why should you save more money into your pension?
If you aren’t convinced yet as to why you should save more money into a pension, here are a few advantages that can change your mind:
- The earlier your start, the easier it is to grow your savings rapidly
A common concern that most soon-to-be-retirees have is the possibility of their savings not being enough to live the life they’ve always wanted to have after their working years. Most professionals, however, are unaware of the fact that pensions double as a long-term savings plan rapidly grows their investments or savings at significant rates.
Should you find yourself in need of an effective and quick plan to grow your money, then let us help you start saving into a pension right away!
- Saving into pension yields various incentives from the British Government
On top of the rapid savings that come upon investment, saving into a pension also makes professionals eligible for tax relief. Getting tax relief is a significant advantage for any pensioner because it redirects a certain percentage of tax payments back into their pensions, saving them hundreds of pounds annually.
- You can get a tax-free lump sum upon retirement while easily conserving the rest of your pension
According to the rules and regulations of various pension providers and plans, a pensioner can take up to a quarter of their pension savings as a tax-free lump sum. The ability to get a tax-free lump sum from your pension is a simple yet significant advantage that is convenient and helps reinforce financial discipline in the long run.
Making the smart decision of saving more money into your pension before retirement right away is the key to living comfortably by your own conditions long after you’ve left the workforce. There is no better time to start building an additional pension on top of your state pension than now.
If you’re looking for a financial planning business to help you learn more investing in a pension, get in touch with Innes Reid and see how we can help!
