Sewing teacher Roz talks planning ahead for retirement
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.
For Roz, aged 56, there is plenty to think about right now. She currently runs her own business, ‘Sew much fun’ - a sewing shop in central London teaching creative people of all abilities how to sew. She started in the industry at London College of Fashion, and has now had 25 years of experience in production and design management, opening up her shop nine years ago.
Before Roz started her company, she began paying into her workplace pension in her previous job, which she has been able to take early. She tells us: “I don't entirely believe in saving everything for when you are 65, I think having a little now is good.” Paying into her pension as early as possible, and thinking for the long term has meant that she’s been able to supplement her income, making her dream of owning the sewing shop and school much easier. This is a really important factor for Roz, and she explains that business is one of her main priorities right now:
I love to teach, buy fabric and talk to people, so my shop offers all of this to me. But it is a lifestyle choice to enjoy work every day
Whilst Roz is still working long hours, she is loving every minute. Her plans for the future are simple, with hopefully some relaxation involved, telling us: “When I’m 65 I still want to share my sewing knowledge but maybe not 24/7 like I am at the moment!”
Banking on bricks and mortar
Our research reveals that four in 10 (42%)1 people are aware that they need to make sacrifices to get to where they want to be, and Roz agrees that “you have a much better chance of achieving things if you plan for them.”
Roz has assets in housing which, on top of her existing pension, she sees as a fundamental part of funding her retirement. She told us that her daughters are aiming to be in a similar position:
We are advising that our girls join reputable companies on graduation with good saving schemes. Housing is now so expensive I can see that they just want to save towards that goal. Somehow a home is more important than a pot of money.
This is an option which many people choose, but like any investment, might not work for everyone. Whether or not buying a property is part of your retirement strategy, Roz tells us that she would “encourage people to start planning their retirement both financially and how they would want to spend it!” Using online resources like Aviva’s Shape My Future tool, this is now easier than ever, and you can align your dreams for later life with how much you need to save now.
What types of pensions are available?
Brushing up on your pensions knowledge won’t take long, but knowing your options will mean you can pursue what you’re passionate about – just like Roz.
Despite being rushed off her feet, she’s found some time to learn about the types of pensions that are available:
You will be entitled to a state pension when you reach state pension age if you’ve paid enough National Insurance contributions throughout your working life.
There’s the workplace pension where employers will pay a certain amount into your pension pot, and your own contribution is deducted from your salary. You will also receive tax relief on the money you pay into this.
You can also choose to have an individual pension, which can be set up through a financial adviser and your employer can make contributions. These are flexible, and you can pay in regularly, or pay one-off lump sums if you wish.
This information is based on our understanding of tax legislation at the time of writing, although this may change in the future.
The value of your pension investment is not guaranteed and can go down as well as up and you could get back less than has been paid in.
For more information on types of pensions and the options available here.
Saving for your retirement
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