You may have missed in recent news that the age at which people can access their private pension money will change, raising the age from 55 to 57. This new rule will come in to effect in 2028, and it means that anyone currently 47 or under will have to wait an extra two years before they can access any of their pension savings.
This will not be welcome news for those who have clear plans for their retirement. It may also go unnoticed by many people who are under the age of 47 who may have a pension, but don’t have a firm grasp of how much they have saved or when retirement will be possible for them financially.
Too often people tune out of thinking about saving for retirement, despite a pension being one of the most tax efficient means of planning for retirement. It’s easy to understand why: pensions can often seem complicated, and people are left without a real understanding of how much they should save or when they will want to stop work.
For many people, the time frame and amount saved into a pension plan suddenly becomes important when they reach their early 50’s. It’s often at that point when friends start talking about retirement plans, and people more urgently start to connect to their savings and to get a firm understanding of their pension balance sheets.
Pension contributions will need to be larger the later you start.
It is common knowledge that contributing regular amounts as soon as you start working is the most effective way to invest and to save for retirement. Small contributions made early and left to grow over many number of years typically provide substantial returns. But for some people, especially the self-employed who can have fluctuating incomes, this isn’t possible and retirement saving comes hard and fast at a later date.
For those who are close to retirement, contributions made as retirement approaches have less time to grow. Many clients come to us at a later date knowing they need to save more quickly, but are unsure how or how much to invest.
If you do not have a clear retirement plan, then it could be of real benefit to speak to a financial adviser to review your current pension and saving plans. An advisor will look at your situation in a much wider context that just how much you are saving, for instance addressing whether at retirement you may have a mortgage paid off or dependents to still provide for. They will talk about your expectancy on how long you plan to work and what you hope your lifestyle will look like when you retire. All these personal aspects will be used to help understand how wealthy you need to be at retirement and if the amount you are saving now will provide enough income to meet your expectations.
Whether you are aged under 47 and the new changes to pensions could affect you, or you are closer to retirement and want to review you plans, our advisers at Fuladvice are here to help.
To find out more about a starting a new pension plan or reviewing your existing arrangements, call us on 08000 478 535 or complete the form below to arrange an appointment with one of our advisers.