As the government becomes increasingly unreliable financially, and pension ages keep shifting with little-to-no wage increases, many people are thinking about their pension and when they should start saving.
Now more than ever, pension planning is critical to your wellbeing in your later years when you may be unable or unwilling to work in old age. To many, their pension is the last of their concerns whilst house and food prices skyrocket, but the earlier you start, the better off you’ll be.
As you start your career
Firstly, every employer is responsible for offering a pension scheme. However, this will almost definitely not be enough on its own or with minimal contributions, even with government assistance. The ideal time to start considering your pension is early in your career. As soon as you enter the workforce, consider enrolling in your employer’s pension plan or setting up a personal retirement savings account to start yourself off. If you can factor in your pension, or slightly higher pension contributions early on, the interest should compound and be
worth significantly more as you age. Every little helps; the earlier you start, the more those little contributions are worth in the long run.
Later on in your career
As your career progresses, aim to reassess your pension contributions as soon as you are able to. If you can, this would be a great time to increase your contribution. There are also specific accounts, called IRAs, that can get you much more for your money. Considering these and even talking to a financial advisor about what options would be best for you, and what risks you would feel comfortable with, at this stage would be perfect.
Now we know life has its ups and downs, and your finances naturally do the same. Major life events such as marriage, the birth of a child, or a career change may impact your financial goals. If you need to re-evaluate at any stage, do! It’s not set in stone, and your goals should be
realistic, not stingy OR crippling.
Some women in work may shift their careers to a stay-at-home parental role, or split their career time to take part-time roles to work around childcare. If this is you, don’t think
this article isn’t relevant to you. Your financial stability is paramount as life comes with ups and downs. Even if you aren’t the one to handle the family finances, make sure you are aware of, and part of, financial decision making around your pensions and retirement. This isn’t just to safeguard you in the event of a divorce, but also the death of a spouse, loss of job security
of your spouse, or economic downturn. You still need to be putting money away
for your retirement, even if it’s with shared finances.
Ready to retire
As you approach retirement age, now more often looking like 60s than 50s, it becomes time to finetune (not start) your pension strategy and to evaluate if you’re contributing enough realistically. Look at the various pension distribution options available, such as lump-sum withdrawals, annuities, or a combination. Each choice has differing tax implications. Again, a financial advisor or even free consultation at your local bank would be a good idea if you are unsure.
Even when you retire, hopefully comfortably, and reap the benefits of your hard work and savings, be sure to keep track of where your money is, how much you have, and what might be the best plans with it to ensure it doesn’t run out before you need it to.
To sum up…
The best time to start thinking about your pension is today. The sooner you start planning, the more time your money has to grow. However, if you haven’t started yet, it’s never too late to take control of your financial future. Develop a clear pension strategy, stay informed about your investment options, and seek professional advice when needed.