Building my savings for the future
Pensions Planning: Building My Savings for the Future
When you get around to thinking about your finances, what sort of things spring to mind?
A mortgage or car loan? Looking after the family? Paying the bills? Probably not pensions, though.
But the fact is that tomorrow comes around sooner than most of us think…
So where do you begin?
First, find out what you already have, and what you could have when you retire. Your annual pension statement can help here.
There’s the State Pension, of course……
For a single person, the current full State Pension is £168.60 per week. You need to have made 35 years National Insurance contributions to get this. Wouldn’t want to live on that? Maybe not. So, what other money would you have to live on?
Think about any money you’re saving in a bank or ISA. Factor that in.
Next, if you have a workplace pension, check how much is being paid in each month.
The benefit of a workplace pension is that you will normally be eligible for tax relief from the government on your personal contributions. So, if you're a basic rate tax payer, every £100 which goes into your pension will cost you £80 from your post-tax pay. This tax relief is limited to the amount you earn in the tax year, or the level of the Annual Allowance whichever is lower.
Next, think about what you’re going to need when you’ve finished working. To maintain living standards at retirement, most people will need an annual income of between 50% and 80% of what they were earning when they were working.
To help with retirement planning visit our website. You'll find videos, calculators and online tools. Our Shape My Future tool can help you get an idea what your future could look like, and what you can do to make changes now.
Think about whether you can afford to save some extra money from your salary. Putting aside just a little now could still make a big difference later.
You need to remember that your pension money is invested to try and help it grow – and, as with any investment, the value can go down as well as up and you may get back less than you put in.
That’s why it’s important to keep a close eye on the value of your pension and other investments.