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Four steps to retirement security

1. Visualise the horizon

When you are young and just starting out on a career, your retirement can seem irrelevant as it is such a long way off. So far off in fact that finding the motivation to save for this highly-important time in your life maybe somewhat difficult.

However, there is no doubt that the earlier you start saving for your post-work years, the better. The earlier you start, the more time you will have to grow and shape a useful amount of money to fund you in your later years. It is also never too early to start visualising how you want your retirement to look. As well as knowing you are putting money away to create security, you are also putting money by for that bucket list of things you can do when work takes a backseat! This is perhaps the two factors that will give you the motivation to start saving long-term and encourage an interest in your financial long-term options.

2. Where to start saving 

The best way to get into saving early is by opting-in to your employer’s pension scheme. In the UK it is mandatory that all businesses must provide an appropriate pension scheme to employees earning at least £10,000 per year and who are over the age of 22. You do not have to worry about sorting out a pension (this is done for you – 4% of your salary is taken out at source, and you will then receive an extra 1% in tax relief from the government) and your employer also provides a minimum of 3%. You can of course look into your own pension scheme but take those extra benefits you will receive from your employer’s pension scheme very seriously.

3. Monitoring performance as your needs change

As you grow older it is important you keep an eye on the performance of your pension, the benefits you will receive and changes in governmental regulations concerning finances. The problem with opting-in is it takes the whole project of contributing to a pension out of your hands.

To offset this you need to nurture, as far you can, an understanding of how pensions work and what is available on the market. In this way, you can monitor the performance of your pension in line with your own needs and aspirations for the future. You may want to revisit how much you are contributing, you may wish to transfer your fund to another scheme due to performance issues, or open another pension scheme that has more appropriate benefits. The point is, pensions are really no more than savings. Take an interest in them because they could determine what your future looks like.

4. Approaching retirement 

So, monitoring your pensions and keeping on top of how your savings are dealt with is essential in order to avoid retirement poverty. This approach also allows you to create a real financial route to your retirement. If you know how you can use your savings in later life, you can plan accordingly. For instance, Pension Freedoms allow individuals in the UK to access their pensions savings from the age of 55. Being able to access your savings as you approach your retirement can be a great benefit. Not all pension schemes allow for access at 55. Also accessing your pension early is not right for everyone and can leave you short of income or worse off in retirement. 

As you approach retirement make sure you have kept a track of all the employer’s pension schemes you have been a part of. It is your money – don’t let it go. But if you change your address, they may be unable to find you. Also keep an eye on maximising your State Pension – this is going to be fundamental to your retirement income.

If you are thinking about your pension, consider using a regulated pensions specialist such as Portafina or, view the guidance at Money Helper

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