What is a pension?
Pensions are plans which you can invest in and allow you to build up a sum of money, sometimes called a ‘pension pot’.
You can use this to provide yourself with an income once you’re retired or semi retired.
You may also get contributions from the government, this is called tax relief.
There are workplace pensions, paid by your employer and yourself.
There’s the state pension paid out by the government.
Or you can pay into an individual pension yourself.
The value of personal or workplace pensions are not guaranteed. You could get back less than you paid in.
What age can I retire?
There is no compulsory age to retire – you can retire as early or late as you like.
You can start to access your individual and workplace pensions from 55 years.
The state pension starting age varies from 63 to 68, depending on when you were born.
How can I retire early?
If you want to retire early, you can start accessing an income from a Workplace or Individual Pension, usually from the age of 55.
You can also keep working after accessing your pension to supplement your income.
How much you’ll need when you retire depends on your outgoings, so it’s good to check to see how much you may get, ahead of time, so you have enough to live on.
Why it pays to start your pension early
You know the old saying, “the early bird gets the worm”?
Well, that’s very much the case when it comes to your pension.
Let’s say you started one at the age of 33 and invested a hundred-and-fifty pounds a month in it.
If your pension pot grew at 2.4% a year, after taking inflation and charges into account, you could have around a hundred-and-six-thousand pounds in it if you retired at 68.
But what if you started when you were ten years younger? If you did that, you could end up with around a hundred and fifty thousand in your pension pot.
That’s around forty-four thousand pounds extra in your retirement nest egg… yet you’ll only have paid in eighteen thousand more yourself.
Of course, this is only an example, and the actual rate of any growth can’t be guaranteed. Like most investments, the value of your pension can go down as well as up and you could get back less than invested.
The reason starting early can be such a good idea is partly thanks to the magic of ‘compounding’ – which is where any investment returns you make can themselves earn returns. Combined with the extra money you’ve paid in yourself, it can make a big difference to the amount you end up with.
And the sooner you start, the bigger the effect can be.
When you’re young, it can be hard to think about the future. But if you want to boost your chances of a better retirement, starting your pension early is a bit of a no-brainer really. Well, unless you’re a real bird brain.
Trace your lost pensions
These days, people change jobs frequently. As a result, they may have pensions that they’ve forgotten about or have lost the paperwork for.
Don’t worry if this sounds like you, because you can get free help from the Government’s ‘Find Pension Contact Details’ webpage.
Just go to www.aviva.co.uk/pension-tracing (Web address moves to bottom of the screen and stay son screen through the duration of the video) and contact the Pension Tracing Service.
Their details can be found on our pension tracing page. You’ll just need to know the type of pension you’re looking for, whether it be a;
A workplace pension
A personal pension
Or a civil service, NHS, teacher or armed forces pension.
You’ll also need to know the employer’s name. The Pension Tracing Service will then give you the details you’ll need to contact your pension scheme provider.
To help your pension provider when you contact them, please have to hand your full name, home address and any other contact information, like phone number or email. It’s that simple!
Aviva - Stocks and Shares ISA
Aviva - Stocks and Shares ISA
We all know that bank accounts and cash ISAs are great for saving up for short-term things, like your summer holidays… or when something breaks down.
But wouldn’t it be nice to get your money working a bit harder for you – so you have more of it to pay for bigger, longer term goals…
…like helping your kids through university…
…helping them buy their first house…
Or perhaps a little something for yourself…
If that sounds good to you, one option is to open a stocks and shares ISA – or an investment ISA, as it’s sometimes known.
When you do this, your money will be invested, meaning it will have good potential for growth – especially over the long term.
What’s more, because it’s an ISA you won’t have to pay any income or capital gains tax on your profits, either. So you’ll get to keep any returns you make all for yourself. Cheers, taxman!
As with all investments, the value of stocks and shares ISAs can go down as well as up, and you may not get back what you invested. So remember to bear that in mind.
You should also know that every April you get an allowance – the maximum you can pay into ISAs during that tax year. This allowance doesn’t roll over from one tax year to the next – so if you don’t use it… you’ll lose it.
No matter what you’re saving up for in life, it’s always a good idea to get your money working harder for you. And over the medium to long-term, a stocks and shares ISA can help you do just that…
…for whatever your plans might be.