It is difficult to even think about your retirement when you are so focused on work and managing your finances month-to-month.
House prices, the cost of renting and a general increase in the cost of living has made it challenging to manage monthly finances for many with lots of people working paycheque to paycheque each month.
It is understandable that this means that your pension is not a priority right now, but it is still important for everyone in the UK to plan ahead so that they will be able to enjoy their retirement and spend it however they wish after many years of hard work.
What You Will Currently Get
Many people, particularly the Millennial generation, are confused over pensions and exactly what they will receive when they retire. This will depend on their working situation, but for those that are employed this will involve a State Pension and a workplace pension. If you are self-employed, you will get a state pension, and it is worth looking into setting up a personal pension.
The State Pension will be £161.34 for those reaching retirement age on or after April 6, 2016, but it will depend on the number of qualifying years of National Insurance contributions and the number of years that you are in work (you will need 35 years for the full amount).
A workplace pension is one which you and your employer contribute to. In April 2019, the minimum contributions are rising so that you will pay 3% and your employer 5%. While this will make a big difference to your pension savings, it is still worth considering increasing the amount that you put in.
Portafina is a good resource for learning everything that you need to know about pensions and it can be used to make intelligent decisions based on your current situation. The money that you add is not taxed and each time you add money, the government refunds the amount of income tax that you have paid. Compound of interest – the eighth wonder of the world – ensures that you can make significant savings by adding to your savings little and often over your career.
How to Add to Your Pension Pot
Adding more to your pension plan is a smart move financially, but this is difficult when you have so many financial obligations and the cost of living is so high. To add more to your pot, Portafina Discovery can be used to learn how to manage your pension so that you can maximise the amount that you are contributing without neglecting your financial obligations. This might involve making small changes to your monthly budget – even something as small as making your own lunch or walking to work could make a huge impact over a long time particularly if you start early.