The thought of retirement for many of us may be long off, or just something we don’t really like to think of, but whether you like it or not, you can’t avoid it.
Pensions may seem complicated, but the reasoning behind them is actually very simplistic and vital if you want to live a comfortable lifestyle after retiring.
More than half of the population in the UK either aren’t saving for their retirement or they’re not saving enough. This means that half of the population may end up, working longer to increase their pension, have to start saving more to make up for their current lack of savings or simply have to adjust their expectations of retirement.
The state pension, as of 2016, was just £155.65 per week, this is much less than what the majority of people hope to live on so if you want to have a better, more comfortable retirement then you really need to start thinking about your pension.
Opt into Work Based Pension Schemes
Did you know that if you opt out of work based pension schemes you could be missing out of thousands of pounds? This is due to lots of companies matching employee contributions, so if you opt out, you’re simply saying no to free money.
Tax-Free Sum When Your Retire
Typically, you can take a quarter of your overall pension as tax-free.
Furthermore, if you’ve built up your own pension (not a company one) you’re free to do with it as you wish from the age of 55.
Think of it as an Alternative Saving Account
A pension is, in short, another form of savings but only not for a mortgage or a holiday but for your retirement. This pension is good because you won’t really see the money or view it as your until you come into retirement, then you will be pleasantly surprised.
Even if you don’t think you’ll ever need a pension, it’s good to have an emergency pot stashed away.
From unexpected illnesses to any insurance problems, you never know when you may need a little extra cash and your pension can be your life saver.
Pensions are Good for the Economy
Did you know that putting money into your personal pension plan is actually good for the economy? When you put money it’s often held in a giant pension which is then used to invest in companies and grow the economy.
Your Family May Receive Money if You Die
If you’re paying into a workplace pension and you die whilst still being employed, your employer may give your family three times your salary.
Furthermore, if you have a separate pension, when you pass this will go directly to your beneficiary and the only tax they will have to pay on this is the standard income rate tax at efile time.
Overall, investing in a pension scheme both in work and out of it can be hugely beneficial and help you to live a comfortable life after retirement, after all, we all work to be able to retire happy and without money worries.