Copyright scotsman
Most people don’t think seriously about retirement until it’s almost upon them – but the earlier you face the facts, the stronger your future will be. These are five hard truths about money, pensions, and planning that everyone should understand when thinking about their retirement plans. 1 Start early, start small, but just start The best time to start investing for retirement was 20 years ago – the second-best time is today. The earlier you begin, the longer your money benefits from compound growth, where your returns earn returns. Over time, that snowball effect can turn regular contributions into a substantial pension pot.Pensions also offervaluable tax advantages. For most people, every £80 saved becomes £100 once topped up by the government, and higher-rate taxpayers can claim more. Add in employer contributions and years of compound interest, and the results can be transformative. If you can’t start big, start small – doing something is better than nothing. 2 Your pension pot probably isn’t enough A comfortable retirement in the UK costs about £43,000 a year for a couple. Using the “4 per cent rule” as a guide, that means a pension pot of roughly £1 million. It’s a daunting figure, but knowing the gap between where you are and where you need to be is the first step to closing it. Do you know what income your pension is currently on track to give you in retirement? Most people don’t. Check your latest statement or log into your provider’s online portal to see your projected income. If it’s less than you’d hoped, act now – raise contributions, review investments, and use employer matching. 3 Your home is not your pension While it’s true that property can be a valuable asset, it is not a dependable retirement income plan. How would you feel about having to downsize to fund your lifestyle? And selling your home isn’t always easy if you have to do it at a specific time. The housing market can fall, maintenance costs rise, and your home does not pay a regular income. 4 Skipping life insurance cover is gambling with your family’s future Who would be affected if you had died yesterday? Could your partner still afford the mortgage, the bills, or the weekly shop? For many families, the loss of one income would create an immediate financial crisis. Life insurance exists to protect against that. A modest monthly premium can provide a lump sum that keeps the home secure and the bills paid, giving your loved ones financial breathing room when they need it most. 5 Take control – and know your numbers You cannot reach a goal you have not set. Work out the income that you will need in retirement –even roughly – and plan backwards from there. Planning for the retirement you want isn’t just about money – it’s also about confidence and peace of mind for the years ahead. The best retirement plan is about giving your future self security and freedom. For advice about retirement planning, email matthew.byrne@quilterfa.com or go online at www.quilter.com/matthew-byrne
