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Mention the word ‘pension’ to anyone under the age of 30 and they usually look away in disinterest. Why, because like most people their age they think they have years before they need to start worrying about retirement funds. But the reality is that the longer they leave it the larger the amount they will need to save each month in order to achieve a good standard of lifestyle when they retire.
Those of you who don’t pay into a pension yet, or feel they can’t afford to, should start thinking about it sooner rather than later. Here are our tips on how to start saving for retirement:
You will be now be automatically enrolled into your work's pension scheme if you meet the following criteria:
-You aren't already in a qualifying workplace scheme
-You are aged at least 22
-You are below state pension age
-You earn more than £10,000 a year in 2017/18 and you work in the UK
Although you can choose to opt out why would you? There are two good reasons why:
1-It means that joining a workplace pension scheme becomes that much easier. Rather than having to take steps to join, under automatic enrolment most workers will be signed up as a matter of course.
2-It makes saving into a pension more financially attractive as it is compulsory for employers to pay into eligible workers’ pension schemes too. A lot of employers were already doing this, but now all have to. The minimum employer contribution, before April 2018 is 1%, rising to 2% in the following year.
Set yourself a weekly budget
Do you really know how much money you spend on a day-to-day basis? Work out how much you need to spend and how much you actually spend in a week. Try to stick to the first amount and money you have left over can be put into a private pension savings plan.
Go cash only
Stick to your weekly budget by withdrawing the amount you have allocated yourself in cash. You will be less likely to fritter money away if you can see it depleting quickly in your purse or wallet.
Open a separate bank account or an ISA, then from your usual account set up a monthly standing order to pay straight into your savings account. This way you’ll be saving money regularly and it will become as automatic as paying your mobile phone bill each month, the only difference is you’ll be saving without even realising it.
Ditch the interest
If you have large credit card balances that you cannot afford to settle at once why not look at doing a balance transfer to a card with an interest free balance transfer offer’. There are many to choose from with some offering more than 3 years interest free on balance transfers. This way you can look at clearing the balance during the interest free period and the amount you save in interest payments can be put into pension savings.
Cut down on nights out
If you go out a couple of times a week how much would you spend. I bet £30 or £40 per night is a minimum right? Well just by cutting back to once a week you would save an average of £1750 a year, which over the course of a few years could add quite a big chunk to pension savings.
It isn’t easy saving for a pension, but the earlier you start the more saving will become a habit. And remember, the longer you save for the more time it has to work for you and build up a better pension pot for when the time eventually comes.
The value of pensions and the income they produce can fall as well as rise. You may get back less than you invested.
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