In these difficult financial times more and more pensioners are being forced to work through the national retirement age and even into their 70s. There are a number of reasons this is the case however the measly basic state pension and the rising cost of living have been identified as the main areas of concern.
While for many pensioners it’s now too late to combat these tough times, as a young adult you should be working hard to build a healthy retirement fund. There are many aspects to building a retirement fund however the main one is planning. Throughout this article we are going to discuss ways in which you can plan to ensure that your retirement years are free from finance related stress:
20 – 29 Years Old – Save What You Can
If you’re in your twenties then the last thing you’re focused on when you receive your pay packet is your retirement fund. This is understandable, which is why many experts recommend that you prioritise paying off debt such as student loans, credit cards or personal loans before you worry about churning your income into retirement.
However, saving just a small fraction of your income throughout your twenties will go a long way to helping you later in life. It will also get you into the habit of saving as and when your budget allows you to do so.
30 – 39 Years Old –Join the Company Pension Scheme
Your thirties are a busy time for your finances; you may be planning a family, buying a house or creating some savings. However, one thing that should also be in the back of your mind at this time is your pension. If you haven’t already done so , now is a great time to join the company pension scheme so you can take advantage of the employer contributions that are now being offered by the majority of companies.
40 to 49 Years Old – Commit a larger percentage of income to your pension
It is at this time of your life that your income is likely to be at its highest level, it’s also likely that you’ll be free of any student or credit card debt that you incurred throughout your 20s and 30s. For this reason, your pension should almost be at the forefront of your mind. When assessing your budget you should make an extra allowance for your pension. One idea would be to churn any performance related bonuses straight into your pension to boost your retirement savings.
50 to 59 Year Old – Maximize your contributions
Your working life is now in wind-down, however you pension contributions should be in overdrive. It is at this point that your children may have now moved out, your mortgage has been paid off and you may have even downsized house to save money. This means your budget should allow you to make significant pension contributions, it is also at this time that you start to think of a rough date when you’d like to retire by. This date will be dictated by your current pension fund meaning if you’ve planned well and made regular contributions, you may be able to afford an early retirement.
Retirement should be all about enjoying the finer things in life; golf, holidays and meals out. By planning effectively and making regular contributions to your pensions you’ll find that you’re able to enjoy your retirement without the finance related stress that many are being burdened with these days.