The thought of planning your pension and figuring out retirement isn’t something you think is important when you’re in the prime of your life but future you, sipping martinis on a beach, will thank you.
Households spend almost £2,200 a month during retirement, which covers basic areas of spending, as well as European short-haul holidays and other luxuries. This equates to around £26,000 a year. Panicking yet? Don’t worry, simmer down and prepare to feel the full force of my powers of comparison.
Pension Awareness Day is this Friday 15 September and to celebrate I am going to help you figure out your financial future. Shimmy on down…
1. Start saving now
If you start putting away for retirement in your twenties, or as soon as you start earning, you’ll be so much more comfortable in your later years. Saving from as early as possible means you’ll have to save less money per month and you probably won’t even notice it’s gone. The later you start, the less money you’ll have in your pot, or the more you’ll have to put away to achieve the same goal. Setting up an ISA with tax-free interest is a savvy way to up your savings.
2. Plan ahead
Figure how much money you’ll need to live comfortably once you retire and make it realistic! Consider everything from day-to-day living, luxuries, your lifestyle, property/mortgage payments and life expectancy and set milestones, you can even treat yourself when you reach them. If you’re married or are in a long-term relationship, also consider outgoing payments you’ll make as a couple if you stay together until you’re old and grey.
3. Finding the extra money
In order to save, you should consider altering your spending and lifestyle habits to make sure you can afford to put squids away each month that will come in useful when you retire. Budget for items you need, not for items you want – think clever, and you’ll be surprised with how much you can save when you put your mind to it!
4. Banish debt ASAP
Debt brings stress so don’t get into the habit of owing, or missing payments. Start your saving journey with a clean slate and that means every penny is yours to play with and not used to pay off interest fees.
5. Company pension scheme
Join your employer’s pension scheme and set yourself some money aside from your salary each month without even realising it’s gone. By paying a small percentage of your salary into your company’s pension pot, you’re essentially investing in your future, and your employer will add a percentage too, win win! This sum of money, however big or small, will be all yours when you reach retirement, even if you move jobs.
Breath deeply, my friend. Let my incensed comparison market cleanse your soul. Head over to my credit card comparison table and get a whiff of the best credit deals.